We have written about the increase in loan amount allowances more than any other topic over the last few months, and today we’re highlighting the latest loan solution that allows 85% financing on a $2mm home purchase—NO mortgage insurance and NO seller financing required.
This type of financing is accomplished by structuring a piggyback loan solution: one in which there are two loans involved to finance one property. The first mortgage may go as high as 80% loan-to-value, with the second mortgage (in the form of an equity line of credit) being 5% of the purchase price. Combine this type of leverage with the fact that qualifying borrowers have payments well below current monthly rent levels, and you have a compelling solution for anyone looking to buy up to the $2mm level with limited down payment.
With the consistent increase in home values over the last two years, piggyback loans (actually second mortgages in general) are really flying high again. This trend is certainly great news for both buyers and sellers since higher leverage means greater qualification for buyers and higher demand (higher property values) for sellers.
For piggyback loan details or details on any of the vast mortgage programs available in the current market, please contact your favorite mortgage advisor today.