A Tandem Loan Can Help You Buy Your Dream Home
July 28, 2008 by admin
These are actually two loans in a tandem loan and Trident Mortgage of Devon would like to help you better understand what a tandem loan is. Also know as an 80-20 mortgage involves taking out two loans to pay for the entire cost of a home. The first lien is for 80% of the sales price at market rate for 30 years. The second is a 15-year note for 20% at a higher rate, which would more typically be paid for with a down payment. Since the first lien is for 80% LTV, no mortgage insurance is required. However, there are credit score requirements to qualify for these loans.
Many times you will have two choices when it comes to the second mortgage portion of the 80 20 mortgage. The second mortgage can either be a fixed second mortgage or it can be a line of credit.
An 80-20 mortgage or tandem loan is most attractive for someone who doesn’t have the money for a down payment, or desires to use these funds for a different purpose. It can provide a more realistic option for first-time buyers, as they do not have funds from the sale of a previous home.
Todd Beal
431 West Lancaster Avenue
Devon, PA 19333
Phone: 610-889-7631
Fax: 610-889-1570
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[…] in a tandem loan. Trident Mortgage of Collegeville would like to help you better understand a tandem loan. As you know, an 80-20 mortgage involves taking out two loans to pay for the entire cost of a home. […]