What is a Interest Only Loan?
To some mortgage companies a 20 80 loan is noted as a extreme type of loan because its mostly interest you are paying with this loan. With a 20 80 loan you start out with a mortgage loan for 80% of the value of your home then a secondary morgage loan to cover the left over 20%.
The secondary mortgage loan of 20% is much higher interest than the first loan. This part of the loan is also what most would consider the down payment. In this loan you do not need a down payment because the 20% covers it. The 2nd mortgage also can help you to get money for cash out, home improvements, and borrow for debt consolidation payouts.
Tips to consider when purchasing a home with a 20 80 loan would be the following. First, make sure your 20 80 home loan is needed and your homes value will appreciate instead of depreciate once the loan is paid off. We also strongly advise you to look at other loan options before you consider a 20 80 loan. You also may incur a tax advantage when using a 20 80 mortgage for your home loan. Check with a tax professional for more advice.
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