If you are interested in buying a home but does not have an ability to pay required 20 per cent down payment to the lender initially then 80/20 mortgage is tailor made for you.
In most US states, the average price for buying a home has increased significantly over the past two or three years.
This makes it real tough for plenty of people to qualify for the conventional mortgage financing.
Therefore, in order to secure the 100 per cent mortgage financing, you are only left with one option, 80/20 mortgages.
Generally speaking, this is basically two loans.
You can avail first mortgage for 80 per cent of the value of your home.
On the other hand, you can get second mortgage for the remaining 20 per cent of the value of your home.
When you go for this mortgages, you do not need to pay private mortgage insurance.
This in turn can save you plenty of money in the form of monthly mortgage payment.
Apart from this mortgage, there are few financial institutions operating in the market that provide financing for 103 per cent of the asking price on your home.
The main advantage of this kind of financing is that it covers closing costs of the home.
To get an 80/20 mortgage you have to take the assistance of mortgage broker.
Mortgage brokers normally have access to a wide array of unconventional lenders and financial institutions to assist people in qualifying for loan.
Before signing contract paper of any mortgage loan, read the terms and conditions part carefully.
If you are not happy with any part of the contract, tell your lender immediately.
Once you sign the contract paper, nothing can be done about it.
To avoid overpaying for your mortgage, it is quite important that you do your homework first.
To start with, take quotes from at least five or ten mortgage lenders.
By doing this, you will get to know what the standard interest rates in the market at present.
Also take into consideration the repayment schedule offered by various lenders.