EX: if i buy a $100k home, then pay a 20% down paymet, my mortgage loan will be $80k...?
the reason i put 20% down is to
A) not have an escrow
B) not pay PMI
maybe 6 months later i take out a $20k home equity line of credit
would this make sense?
- girlmidgardLv 78 years agoBest Answer
It depends on the type of loan you're getting (some require more down, some less). If your credit isn't awesome, they can play around with that, and they can require impounds and PMI. One way they used to avoid the PMI was to do a 1st and 2nd (not an LOC), but the creative stuff is really not out there like it used to be. Every FHA/VA/HUD loan I see has impounds and PMI.
If you are borrowing the max amount allowed, you won't be able to take another loan out on top of it in 6 months, as you've eaten it up in the initial loan already. Unless you have 20 times the value of the house in the bank and perfect credit.
- SumDudeLv 78 years ago
idk current rules of PMI. In the past, if you had 20% equity, you were exempt from PMI.
You could not get a HELOC though because banks will only loan up to 80% of the value of the home that is not already encumbered. [ 80% x 100k = $80k mortgage ] So if you paid down the principal (say) $456 then you could get a HELOC with a max value of $456.
If you want or need that $20,000; do not put it as a down payment (if you can qualify for 0% down) and resign yourself to paying the PMI.
Escrow is up to you. You can pay house insurance and land taxes on your own when due, or pay 1/12th in every month to bank, and bank will pay the bills when due.
- RobLv 78 years ago
sorry u been misinformed sadly.
20% down will allow u not to pay PMI.
20% down has zero to do with Escrow.
most mortgage require monthly escrow
payments as part of loan. u get to pay.
as for taking a 20K equity loan will not
work. no way.
u may get as much as 10K after 1-2yrs
depending on your contract or banks
u will pay nearly 2 times house % rate.
Banks got Scammed/Burned from your
ideas 5yrs ago. (housing bubble)Source(s): foreclosure buyer