What is a "Piggy-Back" loan?
Answer: (c), A home financing option with two mortgages.
A "Piggy-Back" loan is a home financing option in which a property is purchased using more than one mortgage, from two or more lending institutions. See www.MortgageNewsDaily.com. There are three types of piggyback loans: 1. The most popular 80-20 loan is when 80% of the loan is financed by one lender, and 20% is financed by a second lender . This requires no down payment on the property. It is a cost effective solution for first time homebuyers. 2. The 80-10-10 loan is when 80% of the purchase price is financed by lender #1 and 10% is financed by lender #2, and the remaining 10% is paid by the homebuyer in cash. 3. The other choice is an 80-15-5 loan. Essentially this works as the previous examples given, except that the down payment is 5%. Putting less money down will typically result in a higher interest rate on the mortgage. First time homebuyers use the piggyback loan most often since their challenge is to save money for a down payment. Web sites with useful relate information include: www.finance.comcast.net/personalfinance www.realestate.com/tipsandtools/Special-MortgagePrograms www.CNNMoney.com
