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A 100% home cost mortgage vs 2 loans (one for 80% the other for 20%), which one is better?? |
A 100% home cost mortgage vs 2 loans (one for 80% the other for 20%), which one is better?? It really depends on the overall picture. The blended rate on 2 loans could be close to the one loan option, but with the 1 loan option you will probably pay Mortgage Insurance. The rates on the 20% 2nd loans have really gone through the roof, so the 1 loan options are starting to look better again. As far as closing costs, it really depends on the type of loan and the lender you are using. The Bank that I work at charges very little on fees and we have no junk fees that I see other lenders use. But being that their are 2 loans there are more costs than just one loan. You should have your lender go over the difference in total monthly payments and difference in closing costs for the 2 options and see which one looks better. With 2 loans, chances are you will want to refi or combine the 2 together within a few years if you have built up equity. With one loan, if you are paying Mortgage Insurance, after 2 years if your value has increased, you may be able to eliminate the Mortgage Insurance and your payment goes down. Not the case with 2 loans. S, look at the overall payments and costs and ask yourself if you plan on being in the same house or same mortgages for more than 2 years. Source(s): http://www.IDoHomeLoans.net http://www.first-time-homebuyers-loans.c... Which one has lower interest payments in the end? Each loan will have their own closing costs which are usually quite expensive. If they are amortized over the length of the loans, you are looking at a lot of extra interest. It might be a good idea to try not to borrow 100% of the cost of your home if at all possible. The real estate market in a lot of areas continues to soften and even in DC area it is now a buyers' market. If you find you want to move in the next few years, you may not have enough equity at time of closing to finish off all of this debt, and I don't know how you would go about taking care of that. We had a wonderful opportunity for my wife and I to make much more money and have less stressful jobs last year but we had to move half way across the country. I would have always felt very badly if we had to turn it down because we were stuck with debts that we could not pay. Just something to think about. |
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