Author Topic: Piggyback loans, 80/10/10 or 80/15/5 in 2015  (Read 4252 times)

Midas

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Piggyback loans, 80/10/10 or 80/15/5 in 2015
« on: March 06, 2015, 09:05:03 AM »
Are there many lenders doing these in 2015? Or do you have to go through two separate lenders, one for each loan?

Are the rates so much higher with these that you might as well just do the normal 80% loan 20% down payment?

Can you do a piggyback loan if you're buying a duplex? Lenders seem to require more of a down payment on these (minimum 25% down payment instead of 20% at one I checked).

Anyhow, if anyone has any lender to suggest that actually do these I'd love to hear about them.

I'm in Texas.
« Last Edit: March 06, 2015, 09:36:16 AM by Midas »

waltworks

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #1 on: March 06, 2015, 11:43:47 AM »
Why do you want to do that?

-W

Midas

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #2 on: March 06, 2015, 11:57:26 AM »
To not have to sell anything in my portfolio and take advantage of possibly low mortgage rates and larger tax deductions.

waltworks

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #3 on: March 06, 2015, 12:09:44 PM »
Do you actually itemize? Is the mortgage going to be so huge that it will matter for your taxes?

AFAIK, you will always pay a premium to get a loan that leaves you with no skin in the game. Piggybacks are for poor people, loaded with fees, and a crappy deal. At least they used to be. Maybe, if they still exist, that has changed, but I wouldn't touch that idea with a 10 foot pole.

-W

To not have to sell anything in my portfolio and take advantage of possibly low mortgage rates and larger tax deductions.

Poorman

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #4 on: March 06, 2015, 12:26:28 PM »
I'm in the mortgage industry and I haven't heard of any lenders offering piggybacks on investment properties.  You might want to check over at Bigger Pockets.  There are a few posters that are extremely knowledgeable about niche products for investors.

Edit:  I just noticed you were in Texas.  I believe it's illegal to get cash out above 80% even on primary residences in Texas.

Midas

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #5 on: March 06, 2015, 01:40:01 PM »
Doesn't this all depend on your assumptions, risk tolerance, and of course the math?

If you think that if your invested money will grow at 8% in stock index funds and you don't want to pull it out for a down payment (and pay capital gains tax) when someone is offering you 4% interest so you can finance 90%+ without PMI... well, it could be attractive to some people who don't mind the risk. If your assumptions turned out to be true you'd come out on top. But, the question is just how expensive the financed money above 80% is.

It's not like you'd foreclose if you lost your job when you have the money to buy the house in cash.

The other extreme: don't even finance it at all, but pull the full price of the home out of your investments and pay a huge amount of capital gains tax. I think most would agree that isn't a good idea unless maybe you're very wealthy. The opportunity cost is enormous. In between you could put anywhere from 20% to 100% down if you have the money. 80% is just the cutoff point to avoid PMI.

arebelspy

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #6 on: March 08, 2015, 06:04:55 PM »
I have not found any lenders doing these anymore.
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Rein1987

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Re: Piggyback loans, 80/10/10 or 80/15/5 in 2015
« Reply #7 on: March 13, 2015, 03:09:39 PM »
I just did a piggyback like loan in 2015, but 70/10/20. Both 70% and 10% are from the same lender. I did this because I found the combined interest rate is much lower than just one loan. If we go for one loan, it will be 3%. By two, I got 2.375% interest on the 70% loan and 4% interest on the 10% loan. Also, my plan is to pay the 4% interest loan ASAP.