I understand what subrogate means, but not in the context of what I need to get the second mortgage lender to agree to. Any thoughts?
I'm in the process of purchasing a new home, and I'm not going to able
to put 20% down. I've spoke to 3 different mortgage houses, and each
one has pitched this 80-15-5 home payment process.
This is what I know today about this type of home payment. Please
correct me if I'm wrong on any of these statements.
1. I won't have to carry PMI
2. I can claim the interest on each mortgage
3. I can get the house re-appraised in a five years, and potentially
pay down the 2nd mortgage.
4. The 2nd mortgage is a balloon mortgage due after 15 yrs
I've also read a few posts that talk about getting the 2nd mortgage
lender to agree to subrogate the second in the event I want to
refinance.
I understand what subrogate means, but not in the context of what I
need to get the 2nd mortgage lender to agree to. Any thoughts?
Also is there anything else I need to know, or need to look out for
when purchasing a house in this manner?
Could some shed some light on these questions.
You should be able to re-appraise in 1 year if you want to. Can you only pay
down 5%? If so, and you can afford to make 2 payments (a 1st and a 2nd) then
do so since it's tax deductible and you build equity at the same time. But I
wouldn't do the 2nd for more than 5 years. Any longer than that and you're
paying too much interest. I've just bought a house for $221K. It appraised
at $230. I paid down $25K (11% since I couldn't pay more than 15% and the
PMI payment is the same whether I paid 11% or 14% down). In this area it
should appreciate 4%+ per year so in one year it should re-appraise at $239K
($230K X 1.04%). I'll owe about $195K at that time so I'll have 18% equity and
will just pay 2% more on my principal ($4,000) and then I can drop PMI.