This 80-10-10 loan has long been a favorite of mine in Denver, as is the adjustable rate loan that is fixed for the first 7 years. Most of the time folks can either payoff the 10% second mortgage with an equity r-finance because the Denver Real Estate market has had values increase, or they will need to move before the first rate adjustment. Good Counsel is important. See the bottom of this post for good Denver Lenders.
During the banking crisis in the Great Recession, certain types of mortgages were unavailable that are once again being offered. Fortunately, the 80-10-10 mortgage is one of those making a reappearance and it can save borrowers a considerable amount of money.
The objective of an 80-10-10 mortgage is to avoid the expense of mortgage insurance for buyers wanting a 90% loan. A buyer can obtain an 80% first mortgage and a 10% second mortgage with a 10% down payment and not be required to have private mortgage insurance.
For example, a buyer could put $30,000 down on a home priced at $300,000 and get an 80% first mortgage without mortgage insurance. The borrower could get a second mortgage, either through the same lender or a third party.
In the example, the 80-10-10 would save a buyer $193.71 per month which can be a considerable amount of money over a ten-year period. The interest rate on the second loan will be higher than the first because there is more risk.
Helping buyers make better choices is a valuable service real estate professionals can provide. Having the right tools and information can make the decisions easier to understand. Using an 80-10-10 calculator, you can see what the savings might be for your situation.
To find good advice from a local Denver lender, as well as resources for buying a home in Denver, go to www.denverrelocation.com/buying.shtml