Mortgage Tip of the Day:

If you’re purchasing a home – want to avoid moving twice? Most people can qualify to purchase the new home before selling their current one, but they want the money out of the current home to put the down payment on the new one. Here’s a great way to do that – with as little as 5% down, you can split your purchase loan into two – a first and a second lien for about the same amount that you’ll be getting from the sale of yours. That way, when yours sells, you can pay off that second lien and eliminate not only that much of your debt, but the payment that goes with it. And the other big benefit to splitting the loan is because your primary loan doesn’t exceed 80%, there’s no PMI. It’s truly a win/win & we do a lot of these.

If the interest rate is slightly higher than it is on a loan with private mortgage insurance, you’re still going to come out ahead because interest is tax deductible, and PMI is generally not. If you want to lower the rate on your primary loan, look at using a point or points (1% of your loan amount). This way you’ll have the lower rate, and again, discount points are tax deductible while PMI is usually not.

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