Combo Loan - There are 2 different meanings of the phrase "combo loan" in the mortgage industry. The original combo loan was considered to be a combination loan consisting of a first mortgage and second mortgage. This type of loan was brought about to avoid the mortgage insurance you have when financing more than 80% of the value on the home.
Most recently this term has been used in advertising to denote a loan where by the borrower combines all of his debt into one loan on the home. Or better known as the debt consolidation loan.A combo loan, such as an 80/20 or 75/25 loan is a very good idea for someone who plans to have extra money available to them in the near future. Perhaps you expect to get a large commission bonus from your job in the next few months? Or maybe you expect to receive a lot of gift money from an upcoming wedding? In this case, it makes sense to go with a combo loan where you can have a low interest rate on your first mortgage, and a higher interest rate on the smaller second mortgage. This is opposed to going with a sub-prime, non-conforming single loan, where the overall interest rate would be much higher. When you receive your additional funds, you can then pay off that second mortgage with perhaps a minimal (or no) pre-payment penalty.
A Combo loan can also be used to obtain a sum total Jumbo loan with paying the higher interest rates that most jumbo lenders require. Talk to your mortgage broker about your options.
Very often it is advantageous for a homeowner to get a combo loan when the second loan is a Home Equity Line Of Credit.
On a Home Equity Line Of Credit you only pay interest on the amount that is actually borrowed, similar to a credit card but with a much lower interest rate.
For example, if your credit limit is $100,000 and you only have $30,000 out on it, your monthly payment is based on the $30,000. And you still have $70,000 avalable if it is needed for debt consolidation, home improvements or any other reason.
Contact Best No Doc Loans at 888-275-6788 or info@bestnodocloans.com to discuss what options are available to you.
Many lenders now allow loans up to 100% with no mortgage insurance (which is generally required by lenders when borrowing more than 80% of the value of the home on one loan), and more still are providing lender paid mortgage insurance built into your monthly payment, often for significantly less than the combined payment on most combo loans.
A combo loan is the combination of a first loan at 80% of value and a second loan for the remainder borrowed. First loans are only allowed to be to 80% of value. The combination of two loans is used to avoid mortgage insurance.
Combo loans are available in the traditional full documentation process, but also in the stated income and/or limted doc process for self employed borrowers.
When using combo loans as a debt consolidation tool, be sure to have a plan in place as to where the extra money that you will suddenly have on hand needs to go. Your Mortgage Planning Specialist will be able to assist you in working with other professionals - financial planners, CPA's, etc. - on how best to structure your "combo" loan to take full advantage of tax breaks and increased cashflow.
Combo loans can easily be compared with a single loan by "weighting" the interest rates. For example: Somebody receives a quote for a 100% loan at 7.875%. Sounds good to them. But you want to present a combo loan, an 80/20 to them, and show them how the rate, in the end, compares, although there will be two seperate loans, one with a rate that is seemingly mich higher than wanted. So, you are able to quote them 7.5% on the first loan, and 8.5% on the second mortgage. So, to really be able to line that up agains the first rate (in a rate sense...because you can always compare overall payments if that is the borrowers focus) you can take a weighted average of those two mortgages. So in the case of an 80/20 with a 7.5% and an 8.5% rate, do the following: take 7.5 and multiply it times .8 (80% first mortgage) = 6. Then, take 8.5 and multiply it times .2 (20% second mortgage) = 1.7. Then take the 6 and add the 1.7 to it to see that your weighted average for the 80/20 in this case would leave you roughly with a 7.7% rate. Compare that against the 7.875% that was previously quoted, and here the combo loan makes more sense from a rate standpoint, and most likely from a payment standpoint also.
Besides the most common 80/20 combo loan, there are other combinations that are sometimes advantageous. 70/30 or even 65/35 loans can help you take advantage of the lowest possible rate on the first mortgage, which could make your payments even lower. An experienced loan officer can help you decide which option is best for your situation.
Combo loans are increasingly becoming a favorite loan program for first time home buyers and home buyers who do not have enough money to come up with a down payment. These types of combo loans are commonly referred to as 80/20 loans and 100% financing combo loans. By doing an 80/20 combo loan you are able to buy a home with no down payment required and you are able to avoid the much dreaded PMI, or Private Mortgage Insurance. Private mortgage insurance is a type of insurance that is required by the lender when you do not have at least 20% to apply towards a down payment when you are buying a home. Combo loans can help save you a lot of money when buying a home with little to no money available for a down payment.
Combo loans are available to borrowers of all credit types. Even with a 580 score you may still be able to qualify for the tax and money saving advantages that a combo loan can offer.
Combo loans are available in a wide variety of terms. Most often you will see a term of 360/180, meaning your 1st payment is your regularly 30 year amortized loan and your 2nd payment is a 15 year loan. However, there are many other options available. [name] can help you choose which one is best for you. You can reach us at 888-275-6788.
Debt consolidation is when one takes their credit card debt, their car loans, and other loan type payments and roll it into their mortgage. Why would anyone want to do this? Tax advantages. The interest one pays on their mortgage is tax deductible. The interest one pays on credit card debt, car loans, etc is non tax deductible. Rolling this non preferred debt into preferred debt is one of the ways people are able to make lower payments, increase tax advantages and increase savings. Best No Doc Loans is able to help you with this, so contact them now at 888-275-6788.
What is a combo loan? - Have you heard of the term combo loan and dont understand exactly what it is, why it is used, and what the benefits of a combo loan are? You are not alone and this is a very highly asked question. A combo loan is a type of mortgage loan where a combination of 2 loans is used versus 1 large loan. Normally a combo loan is used to avoid PMI and to save money on your monthly payment.
Many jumbo mortgages used to purchase or pull cash out of property are structured as combo loans, with a first mortgage and second mortgage or line of credit.
In a combo loan the second mortgage will have a higher interest rate than the first mortgage. Your mortgage broker will more than likely quote you a blended rate which is the average of the two interest rates combined.
Combo loans are typically broken into 80/20 or 75/25 loans. The first number represents the percentage of the loan amount covered by the first mortgage, while the second number is the percentage of the second mortgage. A 75/25 loan will generally offer a better interest rate on the first mortgage.
Combo Loans - You may have heard advertisements from some companies about a "combo loan". This is really nothing more than a new mortgage that pays off all of your existing debt. These are also referred to as debt consolidation loans.
Combo loans have helped many borrowers in the past, and continue to do so. You receive a loan of 80%, and then the second loan is for 20% of the homes value.
Combo loans are a very popular way that many Americans are buying homes now. By obtaining a combo loan you can avoid costly PMI which can save money in your monthly mortgage payment. With a combo loan you will have 2 mortgage instead of 1. The first mortgage will normally be at 80% of the purchase price of your new home and the second mortgage will usually be the remaining 20% of the purchase price of your new home. Some combo loans instead of being an 80/20 may be a 75/25 loan depending on the lender and rates. Your mortgage professional will be able to place you in the combo loan that is best for you. Combo loans are used quite often for consumers who would like to purchase a new home with no down payment required.
Often the 80/20 loan is called a combo loan. It is an 80% first mortgage combined with a 20% second mortgage. This gives you the most access to your equity.
Combo Loan Refinance - Why would you want to refinance your home through the use of 2 mortgages instead of one? There are many reasons why this might make more sense, 2 mortgages versus only 1. A combo refinance loan can be a smart decision if your loan amount is above 80% of the value of what your home is worth. The reason being is because when you are over 80% LTV, Loan to Value (loan amount compared to the value of your home), you will generally be required to pay PMI. You can avoid PMI by doing the combo loan instead of keeping your refinance as a single loan. Ask your mortgage professional for a breakdown of both options, if he/she has not already done that for you so you can see the difference in payments and decide for yourself which route you would like to go.
PMI stands for Pivate Mortgage Insurance, a premium which you pay on the amount of your loan over 80% on most "prime" conventional mortgages. Combo loans are one way of avoiding mortgage insurance.
As of January 1, 2007 PMI is now tax deductible. In some cases having one loan with PMI may be cheaper than having a combo loan with 2 different mortgage payments you will want to have your mortgage broker show you the difference in the two options if available to you. Another reason for having a combo loan is getting a Home Equity Line of Credit(HELOC) with the 2nd loan. Some people like have the safety of a HELOC incase they need to draw money against it if an unforeseen situation may arise.
Combo loans are used when the person knows they can eventually pay off the second mortgage in a short amount of time. A common tactic is a person may want to buy a home prior to thier exsisting one sells. Then after the exsiting home sells the second mortgage on the new property can be paid off.
Ask your mortgage representative to show you a comparison of 1 loan programs with Lender-Paid MI, 1 loan programs with PMI, as well as 80/20 combo programs. Base your loan decision on your particular needs, time frame for remaining in your home, and other factors. For example, if you will be able to pay off your 2nd lien quickly, a combo program may be for you. Your loan representative will be able to tell you the pros and cons of each program, but ultimately the decision is yours to make.
Combo loans also are attractive alternatives when your credit score is in the high 500s to low 600s. You may not be able to qualify for a A paper loan with these credit scores, but there are subprime lenders that will finance you at 100% by using a combo loan program.
Combo loan - A combo loan allows you to pay off your credit card debt and other higher interest loans and roll that debt into your mortgage. It is sometimes referred to as a debt consolidation loan.
There are numerous benefits to such a loan. First, much of your other debt likely carries a higher interest rate than a first mortgage on your home would. Secondly, the interest you pay towards your mortgage is tax deductible, whereas interest on a car loan, for example, is not.
So not only will a combo loan help you immediately reduce your monthly payments, it will also provide a financial benefit when you do your annual taxes.
For more information on how a combo loan can benefit you, call me at 888-275-6788 or email me at info@bestnodocloans.com.
A combo loan can also be used when buying a home. Combo loans, also referred to as 80/20 loans, are very beneficial due to the fact that they eliminate the need to pay very costly PMI and they can many times allow you to purchase a home with little to zero money down. Therefore, with a combo loan you are able to enjoy a no money down purchase, avoid costly PMI, save on your monthly mortgage payment and obtain additional tax advantages.
Combo Mortgage Loan - Have you been thinking about buying a home buy have no money to put down? Have you been thinking about refincing your home to consolidate some credit card debt or to get a little extra cash out of the equity in your home to do some home improvements? If you answered yes to either of these questions then a combo loan may be right for you. Ask your mortgage professional how a combo loan can benefit you.
A combo loan is any combination of a first mortgage and a second mortgage or home equity loan. Combo loans are an easy way to maximize the use of the equity in your home. These loans can often allow you to borrow up to the full value of your home.
Combo loan or 30 year fixed 1 loan - What is better, going with an 80/20 combo loan or going with a 30 year fixed 1 loan? There are many factors that will determine which is the better option. Rates, PMI, loan terms and many other factors will help to determine which is the better option.
The first thing to look at is the monthly payment: which type of program is more affordable? If you can afford to pay down the 20% portion of your loan rather quickly, that option may work for you. The main thing to do obtain a Good faith estimate for both programs in order to compare them.
Combo loans are increasingly becoming a favorite loan program for first time home buyers and home buyers who do not have enough money to come up with a down payment. These types of combo loans are commonly referred to as 80/20 loans and 100% financing combo loans.
One thing to consider with 80/20 combo loans is that there will be 2 sets of closing costs, since each is treated as separate transaction. You mortgage professional should be able to give you a blended rate to know what your interest rate is for the entire loan amount. Also, you will paying 2 lenders per month.
Many second mortgages in a combo loan are balloon mortgages. This means that all they are based on a 30 yr term they may need to be paid in full in 15 years. Always ask your mortgage broker the terms of the second mortgage.
You usually have the option of having one loan, or two loans with the first being up to 80% of the value of the home. Have a mortgage broker compare the pricing of the two scenarios to determine which is better for your situation.
In today's contracting credit market, terms for 1 loan are becoming more attractive than combo loan financing. In many cases, PMI can now be tax deductible as well.
You will find in most scenarios that the rate on the 1st mortgage of a combo loan will be more attractive than the rate you would receive on a single loan amount at a higher Loan To Value ratio. Another benefit in selecting a combo loan is that as long as your first loan amount is at 80% of the value of the home or lower (80% LTV,)you will not need to pay private mortgage insurance on an A Paper or(good credit,)loan.
It should be noted by any upstanding mortgage professional however, that purchasing a home using 100% financing, whether using one or two loan amounts, is not without its risks. In a down market or market in which values are stagnant or decreasing, a homeowner could actually end up owing more on their home than the home is worth. This is also known is being "upside down," on your mortgage.
It is wise to discuss all possible risks and benefits with your mortgage professional when you are preparing to purchase a home.
30 year fixed 1 loan options are more attractive than ever however the majority of 100% 30 year fixed 1 loan options require mortgage insurance, which while currently tax deductible in many cases, can be expensive for borrowers with lower credits scores (below 720).
