80/20 Home Mortgage Loans

An 80/20 mortgage loan is where, for a new home loan, there are two separate loans with two separate payments. There are also two separate interest rates and the loans are usually funded by separate companies. The two loans consist of 80% of the loan amount and 20% of the loan amount. An 80/20 mortgage loan is a great option for those individuals who do not have a sufficient down payment for buying their new home.
Some of the benefits to having an 80/20 mortgage loan are:
1. No PMI - Private mortgage insurance is a monthly payment that every borrower needs to pay when they purchase a home with less than 20% down. PMI is insurance for the lender to protect the lender against losses should the borrower default on their loan. PMI does not insure the borrower in any way. When you split your mortgage into two loans, one loan is for 80% of the loan amount and the other is for 20% of the loan amount. So, PMI is not necessary for the first mortgage.
2. Qualify for 100% Financing on Your Mortgage - Many times a borrower might not be able to qualify for 100% financing on their mortgage loan unless they do the 80/20 setup with their loan.
3. Lower Interest Rate on 1st Mortgage - Let's say you expect to be able to pay down a significant amount on your mortgage loan in the near future. It works in your best interest to get an 80/20 mortgage loan, because as you quickly pay off the second mortgage, your interest rate on your first mortgage will be much less than if you had financed all 100% of the loan through one company. Usually the interest rate on the second mortgage is much higher, but that is nullified if you pay the second mortgage off quickly.
80/20 Home Mortgage Loans 

Mortgage Information - Refinancing? Second Mortgage? Home Equity Loan? Understand The Basics

A mortgage is usually the biggest purchase that an individual makes, and because of that, many people tend to get nervous during the process. But wouldn’t it make things easier if you felt that you had a “handle” on the process—or at least the terminology? After all, in order to get the best deal on your mortgage loan, you will need to understand certain things such as points, interest rates and closing costs.
If you feel like you could stand to brush up on your mortgage loan terminology, why not read the following common terms and their definitions?
Points
A point is amount that a borrower will pay in order to reduce the interest rate on their mortgage. One point is generally equal to 1% of the loan amount. For example, if you were taking out a 100,000 mortgage, and wanted lower interest rates, you might have to pay anywhere from 1-3 points (or $1,000-3,000 dollars) to get that rate. It’s important to note that some lenders will advertise very low interest rates, and only when you read the fine print will you learn that you will have to pay points in order to get them.
Interest Rates
When a lender makes a loan, they make money by charging interest on that loan. With a mortgage loan, all of that interest is front-loaded, which means that for the first few years, every payment that you will make will go mostly toward the interest.
When applying for a mortgage, you will have the option of “locking-in,” or “floating” your interest rate. If you choose to lock-in your rate, then you will be assured—for about 60 days—that when you close it will be at that rate. However, if it appears that interest rates will go lower, you can choose to float the interest rate, which means that you can watch the rates carefully, and then lock it in whenever it reaches an amount that you are comfortable with.
Closing Costs
When you go to close on your home at the title company, both the buyer and seller will have to pay a pre-determined amount of closing costs. These are determined by the type of loan you get, and the area where you live. Your lender is required by law to inform you of any closing costs beforehand, so be sure to ask for your truth in lending estimate.
As you can see, mortgage terms aren’t that mysterious! Do some research or read some more articles on this site to become familiar with the lending terms that you need to know.
There are also many mortgage companies online that can help you find direct mortgage lenders and home loan brokers that will best suit your needs. This is a quick way to find a good mortgage loan and compare rates and offers from multiple lenders. When lenders compete for your business, it works to your advantage.

Mortgage Lenders Finally Slash Mortgage Rates | Mortgage Expert

In the wake of last weeks shock announcement by Bank of England of a 1½% interest rate drop from 4.5% down to 3%. This was not before time! Around 40 mortgage lenders withdrew their trackers rate products from the market and said they would be reviewing and relaunching their tracker products later this week. By last Friday afternoon the London Interbank Offered Libor (Rate) which shows the interest rate at which the banks are willing to lend money to each other finally fell to 4.49% from 5.56%.

The main indicator and key driver when it comes to lenders pricing their new interest rate products is not the base rate but the three-month Libor rate. The Libor rate is still stubbornly high at 1.49% higher than the Bank of England Base rate. If mortgage rates are to regain any similarity with the base rate then the gap between the base rate and the three-month Libor rate needs to narrow. All we can do is wait and watch!

This defiance by the banks not to reduce their Libor rate continues to reflect the banks continuing unwillingness to lend money to each other. The experts say that the banks are still looking for further signs of stability before the libor rate drops any further and this will be a slow process. Add to this that the banks are hoarding money in an effort to show better than expected end of year results and you now start to see why the banks have been reluctant about dropping their interest rates. The Government is currently applying pressure to those banks where they invested taxpayers’ money in order to get them to reduce their interest rates.

In a strange turn of events last week the lender all withdrew their Tracker rate mortgages after the announcement by the Bank of England. Tracker rate mortgages are designed to benefit borrowers in the event of a Bank of England base rate cuts. The main reason for the base rate cut was to reduce the mortgage costs for borrowers and it was hoped that this would encourage homeowners to set about spending again in the run-up to Christmas and this would then stimulate the wider economy. Unfortunately things don’t work like this and these interest rate reductions will not affect every homeowner. As borrowers on fixed rate deals will not benefit until their penalty period has elapsed. First-time borrowers still need to find a minimum of a 5% deposits in order to buy their first home and there is currently only one lender at present willing to lend to first-time buyers. How are first-time buyers ever going to get on the housing market!

Mortgage lenders will start to pass on their new lower interest rates over the next few weeks and months. So don’t rush out for a quick mortgage deal or a secured homeowner loan. Consider that just 1% saved on a £100,000 remortgage is the equivalent of a £83.33 less to pay monthly. So the lower the interest rate the bigger your savings will be. There is unquestionably more hope around with the interest rate cuts announced by the Bank of England and the London Interbank Libor Rate last week and today there is talk of the government now considering tax-cuts. Better Interest rates to come!