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What is a 80/10/10 Loan and Piggyback Program?

In some cases, traditional loans can create financially burdensome situations for the borrower. Even with proper financing, these types of situations can be difficult on the individual who took out the loan for any specific purpose. A number of safeguards have been implemented in order to protect loaners and borrowers in these types of transactions. However, many of these conditions have resulted in undesirable aftereffects.

One example of a safeguard in a traditional loan situation is PMI. Private Mortgage Insurance is required for all traditional loans with a 90% (or higher) loan-to-value ratio. The purpose of PMI is to insure the loan against default. While this is a safeguard meant to provide a protective mechanism, it can be very costly to the borrower. This type of expense can be unwelcome, especially when starting up a new financial endeavor.

In larger areas such as New York, it can sometimes be difficult to handle the extra financial costs resulting from things like PMI due to the high operating costs the area already presents. The 80/10/10 Loan Piggyback Program provides a convenient solution to this issue. By structuring a purchase or refinance transaction which includes an 80% first mortgage, a second (piggyback) loan of 10%, and a 10% down payment from the borrow.

This type of structure provides significant savings for the borrower due to the fact that the need for PMI is eliminated. Starr Mortgage Company has a seasoned loan team can help individuals who are curious about this type of program understand how it can benefit them. By being knowledgeable of legal and financial aspects of the industry, the team can save borrowers significant amounts of time and money when it comes to acquiring loans.

These types of programs can be very beneficial for those who are looking to acquire loans for projects and property, but are hesitant due to the fact that PMI and other factors can lead to increased costs. Starr Mortgage has dedicated professionals that can help any borrower understand ways to make these types of situations much easier.

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