Tuesday, March 04, 2008

When Your 80-20 Mortgage Blows Up



A significant number of my personal acquaintances purchased homes (newer, larger) within the last several years. Inevitably, they were also convinced that financing via an 80/20 first/second mortgage setup was the way to go. Doing so is "financially smart," because it allows them to avoid paying private mortgage insurance.

It's an idea that works ... until it doesn't. Consider this Baltimore resident's story, for instance:

Baltimore Sun: "Some Lenders Block Refi Ability"

He needs to refi out of his nasty ARM first mortgage — he's lucky, in that he does have decent equity in his home — but his second-mortgage holder won't agree to a re-subordination.

Under any circumstances.

Rut ro.

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— Posted by Michael @ 9:12 AM








1 Comments:
 

His mistakes wasn't an 80/20 loan - it was choosing an ARM rather than Fixed. I think that is the point of of problem, because if he had a fixed he wouldn't need to refi due to rising interest rates.

Anonymous Anonymous
, at 5:05 PM, May 14, 2008  
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