A Fond Memory?
- When Buyers Turned to an 80/20 Loan with an Adjustable Rate
- Are These Days Behind Us For Good?!
Compare an optional 80/20 loan package to a 30yr Fixed Rate Loan:
For this example and comparison, let’s use a sales price of $150,000…
80/20 Package:
No mortgage insurance payments required
First mortgage for $120,000 on a 5/1 adjustable rate mortgage:
P&I (Principal and Interest): $644.19 @5.00%
Second Mortgage for $30,000 on a HELOC, interest-only loan:
I (Interest Only): $162.50 @6.50%
Total Payment: $806.69.
30 year fixed rate 100% stand alone mortgage:
30 year fixed @ 5.875%
PMI (Private Mortgage Insurance): $175
P&I (Principal and Interest): $887.31
Total Payment: $1,062.31
Net savings of $255.62 per month using the 80/20 program.
The income required for the 80/20 mortgage is $34,575 per annum, compared to $45,500 per annum for the 100% fixed rate mortgage. That’s 25% less income necessary to buy that same home!
Buyers are Happy to qualify for more -
Sellers are Happy that more Buyers qualify to Buy their House!
When many Buyers turn to this type of financing, the added demand it stimulates inevitably drives up prices in the housing market.
Michael Spottiswoode
Fax: (505) 888-9650 - Cell:(505) 307-0497
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