Piggyback Mortgages in New Hampshire
Piggyback mortgages are used to avoid “Private Mortgage Insurance” (PMI) requirements. Normally when you put less than 20% down, the lender will require you, the borrower, to pay PMI.
As a consumer, you don’t want to pay PMI. But you have to if you want a really good interest rate – unless, you piggyback.
Normally when you piggyback, you borrow 80% of the purchase price on a 1st mortgage and the rest of the money on a 2nd mortgage.
Example : 80/10/10 piggyback at $250,000 purchase price:
(80% 1st mortgage | 10% 2nd mortgage | 10% borrower's own funds)
| |
PMI Loan |
Piggyback |
| 1st Mortgage amount |
$225,000 @ $1349/mo |
$200,000 @ $1199/mo |
| 2nd Mortgage amount |
N/A |
$25,000 @$150/mo |
| PMI |
$97.50/ mo |
N/A |
| Total payment |
$1446.50/mo |
$1349/mo |
As far as the 1st mortgage lender is concerned, you are putting 20% down (because you are only borrowing 80% from them). You may have borrowed part of the 20% down in the form of a 2nd mortgage, but you still don't have to pay the PMI.