Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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80-10-10: Saving Tips

The 80-10-10 loan program is making a profound impact on families in Orange County, CA. The most profound impact I’ve seen is for people looking to lower their total payment. Very few lenders allow 2nd loans above 80%. That means you’re stuck with mortgage insurance or 20% down as your primary options. I’ve put together the top tips to determine if the 80-10-10 is the right fit for you. Whether you’re purchasing or refinancing an 80-10-10 loan can save you money. See Tip #1.

Tip #1 – A Desire to Save Money

If you’re not interested in saving money then you can stop reading. Since you kept reading I’ll assume you’re interested in the 80-10-10 savings comparison I put together below. This assumes a $550,000 home purchase. For comparison sakes we’ll assume a 10% down across the board. Although unlikely it allows us to focus solely on the cost difference for mortgage insurance. This program will save you anywhere from 12% – 19% on you rmonthly payment. 

Tip #2 – Know Your Current Loan Program  

You may have a conventional loan or you may have a government loan. Does it have mortgage insurance? Do you have an existing 2nd loan? What is your total loan balance? These are important details to know in order to accurately assess where you’re at.

Tip #3 – Know Your Equity Position

Understanding the value of your home is vital with an 80-10-10. If we don’t have at least 10% equity then you’ll need to pay down your mortgage. These are important considerations when determining if you should refinance. Only an appraisal will let us know for sure but there are some steps you can take to gauge the market.

  1. Poll the neighborhood: Talk to your neighbors or drive around the neighborhood. Find homes that are on the market. See what they are asking for their homes. The more similar they are, the more accurate.
  2. CMA: Ask your real estate professional to give you a CMA, comparative market analysis. This will tell you what similar homes have sold for recently.
  3. Contact me: I can send you a property profile that identifies the most recent comparable sales. It will also give you an area sales analysis.

Tip #4 – Interest Rate

Interest rate will be another important factor. The 80-10-10 loan gives you a low rate on your first mortgage combined with a low rate on the 2nd. If you’re refinancing then you want the rate on your first to be at least 0.500% higher than current market rates. In addition to eliminating your mortgage insurance this will help lower your overall payment.

Tip #5 – Property Type

All properties are not created nor treated equal. Single-family homes, condominiums and townhomes are all allowed under the 80-10-10 loan program. However they are treated differently. If you own a condominium we need to know if it’s attached or detached. Why the difference? The difference comes into play when determining the pricing and maximum loan-to-value.  On purchases, we can go up to 90% on all property types. On refinances, condominiums and townhomes are limited to 85%.

Many lenders treat detached condominiums nearly the same as single family homes. Not in this case. With the 80-10-10 program a detached condo is treated like all the others. You’re capped out at 85%. However, there are often pricing benefits that go along with a detached condominium. That benefit is provided on the 1st loan. Therefore, it’s important to know your property type!

If you’re interested to see if an 80-10-10 loan will save you money, contact me. We’ll run through this list together, determine your equity and provide you with some options.

Scott Storace

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