Stop Paying Private Mortgage Insurance With This Simple Strategy

When considering financing for a high-value California property with less than a 20% down payment, understanding your loan options is critical. This overview covers the key differences between jumbo and piggyback loans.

• Jumbo vs. Piggyback Loans: A jumbo loan is a single large mortgage that exceeds conforming limits, which typically requires Private Mortgage Insurance (PMI) if your down payment is under 20%. A piggyback loan, or 80-10-10 loan, uses two separate mortgages to avoid PMI by keeping the primary loan at an 80% loan-to-value ratio.
• Avoiding PMI: The main advantage of a piggyback structure is eliminating the need for PMI. This insurance protects the lender, not you, and the monthly payments do not build equity. By avoiding this expense, your total monthly housing cost is often lower, and more of your payment goes toward your loan principal.
• Long-Term Financial Strategy: Piggyback loans generally offer greater flexibility. You can aggressively pay off the smaller, higher-interest second mortgage to reduce your total monthly payments sooner. They also allow you to refinance your larger first mortgage independently if interest rates fall, a feature not available with a single jumbo loan.

Read the full blog article here: https://www.iqratemortgages.com/blog/jumbo-vs-piggyback-loan-in-california-a-cost-analysis