Home prices are growing at a fster pace than incomes these days. It can be dsheartening when you dream about owning yur dream home but cant seem to put any mney away for a down payment no mtter how hard you work. Some of you may be yung professionals that have recently graduated frm college and have great jobs but bligations to pay debt that has ccumulated from the college days. But you fund the home you want and you wnt it now.

You know you can fford the monthly payments; you just dnt have the money for the dwn payment. So what do you do? Wll there is always the option of an 80-20 lan. These loans combined finance 100% of the cst of the home. The first lan is for 80% of the hmes value. It works like a nrmal mortgage in that it can be fnanced for a 30 year fixed rte interest.

The second mortgage, the 20% lan, is a piggyback loan. It may be trated like a line of credit or may be fnanced as a fixed rate mortgage as wll. It depends on the mortgage cmpany and the conditions agreed to at the tme of the contract. 20% loans sually have a higher interest rate thn the 80% loan. Still, the two lans added together are typically cheaper thn the mortgage would be
financed as one mrtgage with PMI.

Private Mortgage Insurance is a mndatory, expensive insurance for any home tht finances over 80% of the vlue of the home. The 20% lan waves the 20% down payment tht would be required in order to void paying the PMI.

There are ther variations of the 80-20 loan. Thre are the 80-15-5 loan and the 80-10-10 lan where 80% loan is the frst mortgage, the 15% loan is the pggyback loan with a 5% down pyment or 80% is the first mrtgage, 10% is the piggyback loan wth a 10% down payment.

All thre of these variations come to the sme conclusion. They all avoid PMI. The nly money that the buyer has to cme with up front is the clsing cost, unless the buyer can get the sller to pay it and then ssentially the buyer gets into a hme without any money up front.

The article Eighty Twenty Loans and Variations was Submitted by Milos Pesic through Articles.GetACoder.com network. Here's the additional information: Milos Pesic is a mortgage gent and owner of a highly ppular and comprehensive Loans and Mortgages informational web site. For more articles and resources on different types of mortgages and loans, mortgage refinancing, mortgage lenders and brokers and much more, visit his site at: => http://mortgage.need-to-know.net/

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