What is a Piggyback Mortgage Loan?

A Piggyback Mortgage Loan,  also called a blended mortgage, is a combination of two loans. A small additional mortgage is normally given with the larger first mortgage lien on a purchase to help the borrower obtain the mortgage without paying a 20 percent down payment. The first mortgage is usually 80 percent of the value of the property and the second loan can be between 5 to 20 percent of the value. There are some instances where 3 loans are given for example the first would be 80 percent the second 15 and a seller may hold a third for 5 percent.

Conforming lenders require borrowers to obtain mortgage insurance if the first lien exceeds 80 percent of the value of the home on both a purchase and refinance. A piggyback loan will help the borrower bypass the obligation of mortgage insurance by placing an addition lien on the property. Borrowers may have the option of a fixed rate or an adjustable, and the loan can be obtained by the same lender or by an additional lender. For future refinance purposes a blended mortgage will not be recognized as one unless the second mortgage was obtained and closed concurrently with the first mortgage loan.

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