This Week’s Spotlight: “Piggy Back” 2nd Mortgages
January 27th, 2025
This week we introduce the “PMI Buster” loan also known as a “Piggy Back” 2nd mortgage. This type of loan is designed for buyers who have at least 10% down payment, but not quite the 20% down payment necessary to eliminate private mortgage insurance (PMI)?
With our “Piggy Back” 2nd mortgage options, we provide more flexibility for your buyers to save money. This type of loan could be the perfect solution! Here's why:
Key Features:
- A Lower first mortgage balance
- Allows buyers to put 20% or more down, lowering their first mortgage balance avoiding mortgage insurance.
- Flexible Loan Terms:
- Initial Draw minimum $25k - $50k depending on state
- Loan amounts up to $1,000,000 depending on credit score
- Initial 5 year interest only draw, then fully amortizes over the remaining 25 years
- Fixed or interest only payment options available
- Payment based on 30 year term
- Credit-Friendly Solutions:
- Minimum credit score as low as 620
- Higher DTI ratios considered for strong applicants
- Property Flexibility:
- Available for primary residences and second homes - investment properties limited to 85% total loan to value on refinances
Benefits for Realtors:
- Expand Your Client Base: Serve clients who might not want to pay mortgage insurance but have to wait until they have saved the full 20% down payment. Time erodes their equity in a property if they buy later versus now. That house will cost them more later.
- Fast Closings: Streamlined underwriting ensures a smooth process
- Increased Referrals: Help your clients achieve homeownership and grow your reputation as a resourceful realtor. Great for your investors to pull cash out of their inventory to buy more deals (the 3rd “R” in the BRRRR method) - Buy - Rehab - Rent - Refinance - Repeat
How It Works:
- We provide secondary financing up to 90% loan to value to avoid paying monthly mortgage insurance
- We will utilize the same title insurance company, title work, and fees up to $250k loan amount minimizing extra cost to the buyer
- We will utilize the same appraisal for the first mortgage
Why Recommend This Loan?
Why pay mortgage insurance which goes directly to the lender to help mitigate loss, when you can make that payment towards more of the principal balance.
Let’s help your clients turn their dreams into reality! Contact Team No Limit today to learn more or get started!
