Purchase HELOCs, 80/10/10’s, Why buyers Must know about these
This week I want to highlight a program that’s making a come back. Not many lenders have it anymore, but we do. We’re talking about Purchase HELOCS or 80/10/10’s. If you’re a buyer in a jumbo loan or with less than 20% down, you really need to know these programs.
If you were in the housing market about a decade ago, you’re no stranger to this option. The idea is that instead of getting just 1 loan, you break your loan up into 2 loans. The benefit is that you can strategically size your first loan to get the best parameters possible, and then put the rest in a 2nd loan. The 2nd loan usually has less favorable terms, but is smaller and can be paid off more quickly. The result, if done right, can save thousands of dollars over the life of the loan.
For example, lets say that you were buying a home and needed a loan of 575k. The conforming limit in San Diego is 546k, so anything over that puts you into Non-conforming or Jumbo loan status. That means higher down payment requirements, stricter qualifications, and a higher interest rate. Instead, you could structure your loan with a first of 546k, and 2nd of 29k. This trick basically circumvents the need for a Jumbo Loan.
There are lots of situations that make this attractive. But of course, it’s important to compare it to all your options to make sure if it’s right for you. CLICK HERE to shoot me a quick email to see if this recently reemerging program could save you money.