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?

3 Answers

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  • 8 years ago
    Best 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.

  • 8 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.

  • Rob
    Lv 7
    8 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

    policy.

    u will pay nearly 2 times house % rate.

    Banks got Scammed/Burned from your

    ideas 5yrs ago. (housing bubble)

    Source(s): foreclosure buyer
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