Interest rates have been hovering in the mid to high 3s and Janet Yellen (Fed Chairman) stated that the Fed will not raise rates in the near-term. It should be noted the Fed is not the only influence on rates, there are many factors in our global economy such as the prices of gas, problems in Greece and overseas investors hanging out in our bond market which affect the rates.
With rates so low, I have many clients looking into “80/10/10” financing, which stands for an 80% loan-to-value (LTV) first mortgage, a 10% LTV 2nd mortgage, and a 10% down payment. The purpose of getting two mortgages with 80/10/10 financing as opposed to one mortgage to 90% LTV is twofold: (1) borrowers avoid private mortgage insurance (PMI) by keeping their primary mortgage under 80% LTV; (2) borrowers get a much lower payment overall. Overall payments are lower b/c borrowers have no PMI and because the 2nd mortgages are Home Equity Lines of Credit (HELOCs) with “Interest Only” payment options. Almost all major banks offer HELOCs, but only a select few offer HELOCs that fund “concurrently” with a first mortgage. If you are interested in knowing more, give me call (925) 899-7123 or send me a message.