80-10-10 Mortgage
A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an 80% loan-to-value ratio, the second position lien has a 10% loan-to-value ratio and the borrower makes a 10% down payment. 80-10-10 mortgage transactions are piggy-back mortgage transactions, and are frequently used by borrowers to avoid paying private mortgage insurance. Investopedia Says:
The economics of using a second lien rather than paying private mortgage insurance are driven by home price appreciation. If a borrower expects the value of the home to increase quickly, it might be more economical to pay private mortgage insurance for a period of time until the loan-to-value ratio for a first mortgage falls to 78% or below. At this point, the private mortgage insurance can be eliminated, eliminating the need for a second mortgage in a piggy-back transaction. Related Terms:
Combination Loan
Conventional Mortgage
First Mortgage
Junior Mortgage
Lender-Paid Private Mortgage Insurance
Mortgage
Private Mortgage Insurance - PMI
Second Mortgage |