Is a Piggyback Mortgage right for you?

My preferred lender reviewed the pros and cons of a Piggyback Mortgage today.  Talk with your lender to see it it's right for you. 

The Benefits of a Piggyback Mortgage

Lenders who specialized in second mortgages as well as mortgage insurance companies took the largest hit during the housing meltdown. For a long time, neither second loans nor private mortgage insurance  were nowhere to be found. Over time, they have both come back, and recently, come on very strong. As we announced last week, Fannie Mae will be rolling out a 3% down option without the need for lifetime mortgage insurance. But what if you have 10% down? Should you use mortgage insurance or a second mortgage?  Here are some pros and cons of the use of mortgage insurance:

PROS

1. Eliminates mortgage insurance .

2. Increase purchasing power 

CONS

 1. The rate is adjustable

 2. DTI is set at 38/45

Assuming a $600,000 purchase price with 10% down, check out the differences in payment:

$2326    for a $480,000 1st Loan                $2617    for a $540,000 1st Loan

  $262    for a $  60,000 = 2nd Loan            $230  for Mortgage Ins

$2588    total payment                                    $2847   total payment