The 40 Year and 80-20 Mortgage

The 40 Year and 80-20 Mortgage

realestatemarketingthisweek.com - Real Estate Marketing - Fannie Mae is proposing to give you a 50 year loan modification with an adjustable rate - With Michael J Barnes and Dan Havey of Real Estate Marketing This Week Part 6 - The next one is that your loan to value on your house has to be at least 90% of the property value. So in other words everyone under 90% gets foreclosed on? Right, if you only owe 80% of what your home is worth, they can foreclose on you, take your house and they dont lose as much money. Back when I was working with Fannie Mae selling repos almost 20 years ago now, they always gave us the figure that they lost 20% of the homes value every time they had to foreclose. So they have plenty of room to sell your house if you only owe 80% on it. So if you owe, lets just throw out some numbers here, lets say your house is worth 0000 and you owe 000 on it, well they are going to lose a little bit but they are going to make it back when they sell your house for 0000. Yes, they would just as soon kick you out and keep their money. Yes, exactly I am not necessarily going to say that Fannie Mae is going to kick you out of your house, however the reason why they have this guideline is very simple, they are not going to lose money on you if they have to foreclose on you when you are under 90%. They certainly are not going to lose very much money. If you have subordinate loans it may be left outstanding and will not be considered in the LTV, so lets just ...

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"We are seeing 20 to 40 new foreclosures every other week," said Sigstad. "We were at a point where we were doing about 550 foreclosures a month. Right now, we are only back up to about 80 to a 100 a month. So we got a ways to go." Another huge factor ... Local Realtor Says More Foreclosures Coming

Many of my clients keep asking me about the 40 year mortgage and the 80 20 mortgage and while these two kinds of mortgages are similar in many ways, they are also very different as well. The 40 year mortgage is supposed to lower your monthly mortgage payments while the 80 20 mortgage will increase your monthly payments because of the addition of the second mortgage. Both the 40 year mortgage and the 80 20 mortgage are fairly extravagant mortgage products that will only be utilized by a minority of home buyers across the nation. Despite this, they are both growing in popularity at a tremendous rate and it is always best for any home buyer that may be thinking about either product to first become educated about its fundamentals before any action is taken.

The 40 year mortgage is actually not that difficult to understand and it is really what its name entails it to be-a 40 year mortgage product that is instead made for 40 years instead of only 15 or 30.

The 40 year mortgage is supposed to give people a lower monthly payment due to the extension of the repayment term and it does deliver in this regard if you look at it from a certain angle. While it does lower a person's monthly payment by a certain amount, it often does not lower it by a significant amount after all is said and done. This is because the 40 year mortgage usually comes with a slightly higher interest rate than the more conventional 15 or 30 year mortgages and when you compare the two the 40 year mortgage only beats out the more conventional mortgage loans by a small difference. You need to be careful to run the numbers before you decide on this mortgage product as many times the cost savings it provides are a bit of an illusion.

The 80 20 mortgage is different from the 40 year mortgage in that its loan term is for more traditional time periods such as for 15 or 30 years and not 40.

The 80 20 mortgage essentially allows a person to come up with one hundred percent financing for their home purchase by allowing them to take out a second mortgage on the property for up to twenty percent of the price of the home. This will give the home buyer an 80 percent first mortgage, and a 20 percent second mortgage on the property, and for many home buyers this is exactly the kind of financing they need to purchase their home. Do your homework on whatever mortgage loan product you end up going with and in the end you won't get deceived and you'll walk out of the closing with a smile on your face. Find More The 40 Year and 80-20 Mortgage Articles

Question by sven: I need help with my 80/20 loan foreclosure? I recently foreclosed on my home that had an 80/20 loan. The 80 was already auctions and sold but our 20 which was set up as a personal line of credit is still open and now we are being told by the collections agency that we have to pay the 20 percent that is still due. Is this true for az and what can we do, we don't have the money to pay the 20 percent or we would still be in our home. Best answer for I need help with my 80/20 loan foreclosure?:

Answer by Worldly25
You have to pay it. You borrowed it and your only alternative is to declare bankruptcy.

Answer by Real Estate Guy
yes. it was a personal loan.

Answer by Lauren F
Sorry, but if the 20 loan wasn't a lien against the house, but a personal loan,the foreclosure didn't deal with it. You are still on the hook. Maybe talk with your bank and ask for an extended repayment term.

Answer by ☼AstrologerJuliAnne☼
Yes, you still have to pay this. Your only course of action if you cannot pay it, is to claim bankruptcy. Your credit is shot at this point anyways.

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