Home Equity Loans And Lines Of Credit On 80-10-10 Piggyback Loans

ByGustan Cho

This Article Is About Home Equity Loans And Lines Of Credit On 80-10-10 Piggyback Loans

What Are Piggyback Loans And How Do They Work? Piggyback loans are when a homebuyer gets a first mortgage of 80% LTV and a second mortgage of 10% to 15%. Piggyback mortgages are for homebuyers who are buying a higher-end home but do not qualify for a jumbo mortgage or homebuyers who are trying to avoid paying for private mortgage insurance. Gustan Cho Associates offers a 95% CLTV Jumbo Mortgage which consists of a conventional loan at 80% LTV and a second mortgage of 15%.

When homeowners need cash, they can often turn to see if they qualify for home equity loans and lines of credit. Most American families live paycheck to paycheck. However, many homeowners see their homes appreciate in value and as the years pass, they pay down their loan balances.

Typical Purposes For HELOCs

What are the typical goals of HELO

Home Equity Loans and lines of credit can be used for the following:

  • home renovations
  • paying down credit cards and other debt
  • paying children educations
  • care for elderly
  • take a long overdue vacation
  • prepare for weddings
  • or other financial needs
  • they can explore the idea of obtaining HELOCs

Another benefit for home equity loans is when home buyers need 80-10-10 piggyback loans. Homebuyers can use home equity loans to do 80-10-10 piggyback mortgages.

How Does HELOCs Work

Here is how it works:

  • Let’s take a case scenario where a home buyer needs to purchase a $784,350 home
  • The maximum conforming loan limit is $484,350
  • Home Buyer does not want a Jumbo Loan and wants to do an 80-10-10 piggyback mortgage
  • Buyer can put a 10% down payment or $78,350
  • First mortgage conforming lender will lend a maximum $484,350 conventional loan

The second mortgage lender will do a home equity loan and/or second mortgage for the difference.

Who Lends On Home Equity Mortgages

Mortgage companies do not offer second mortgages of any type. Home equity loans and lines of credit are normally offered by banks. While the names are similar, these two products are quite different. With a home equity loan, the homeowner receives the total loan amount upfront from a bank. A home equity credit line gives homeowners a source of funds. They can draw on these funds as needed like a giant credit card collateralized by their home. However, a person’s home secures the amount borrowed. If the loan is not repaid, the lender can foreclose on the house to pay off the debt. Let’s take a look at each of these types of home equity financing.

Home Equity Loans

Homeowners may obtain a home equity loan also known as a second mortgage. The second mortgage can be used by homeowners for any reason homeowners seem fit. Typically, a person can borrow up to 95 percent CLTV of the equity in his or her home.

The actual amount that a lender will be willing to lend also depends on the following:

  • borrowers income
  • credit history
  • the market value of the home
  • lender assessment of borrower’s ability to repay the principal and interest of the loan is the determining factor

What Purpose Can I Use Home Equity Loans And Lines Of Credit

With a home equity loan, a person receives a lump-sum amount at the closing, and the loan is secured by the borrower’s home. The loan is repaid through equal, monthly payments over a stated period. This can range from as short as 5 years to as long as 30 years. The terms of the second mortgage loan depending on the loan’s terms. Interest-only is common as well as fixed interest rates. Variable home equity loans are available as well. If the loan is not repaid, the lender can foreclose on the home.

Home Equity Loans And Lines Of Credit: What Can Proceeds From HELOCs Be Used For

What Can Proceeds From HELOCs Be Used For

Borrowers can use the funds for almost any purpose:

  • doing home repairs
  • paying for college
  • paying off other high-interest debt

Because mortgage interest rates on home equity loans are typically much lower than other creditors such as credit card companies, many homeowners with equity in their homes will take out home equity loans and lines of credit rather than use credit cards to pay for purchases.

Qualifying For A 95% CLTV Jumbo Mortgage At Gustan Cho Associates

One of our popular mortgage loan programs at Gustan Cho Associates is the 95% CLTV Jumbo Mortgage Loan Program. Jumbo lenders are sticklers and very strict when it comes to lending guidelines. Plus, mortgage rates on jumbo loans are substantially higher than conventional loans. Gustan Cho Associates has a 95% CLTV Jumbo Mortgage Loan Program. This consists of an 80% LTV conventional first mortgage and a second mortgage of 15% with one of our wholesale lending partners. The loan officer at Gustan Cho Associates will quarterback the whole transaction including the second mortgage. For more information about our 95% CLTV Jumbo Mortgage Program at Gustan Cho Associates, please contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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