What
is a Interest Only Loan?
To some mortgage companies a 20 80 loan is noted as a extreme
type of loan because its mostly interest you are paying with
this loan. With a 20 80 loan you start out with a mortgage
loan for 80% of the value of your home then a secondary morgage
loan to cover the left over 20%.
The secondary mortgage loan of 20% is much higher interest
than the first loan. This part of the loan is also what most
would consider the down payment. In this loan you do not need
a down payment because the 20% covers it. The 2nd mortgage
also can help you to get money for cash out, home improvements,
and borrow for debt consolidation payouts.
Tips to consider when purchasing a home with a 20 80 loan
would be the following. First, make sure your 20 80 home loan
is needed and your homes value will appreciate instead of
depreciate once the loan is paid off. We also strongly advise
you to look at other loan options before you consider a 20
80 loan. You also may incur a tax advantage when using a 20
80 mortgage for your home loan. Check with a tax professional
for more advice.
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