Avoiding PMI
Hey BP,
Im looking to purchase a 2 Family home which I plan on residing in and renting out the other unit. I was going for an FHA loan with 3.5% down b/c i didn't want to tie up my money in this one property as I am planning on purchasing some investment properties in the near future. After speaking extensively with my realtor, what we came up with to avoid the PMI is this...
Take out a conventional mortgage for 80% of the purchase price. Then taking out a second mortgage for another 10% (such as a line of credit) to be used as a down payment along with 10% of my own cash to fulfill the 20% down payment, in all avoiding the PMI as the 20% down payment would be satisfied.
Does this make sense to anyone? If not, why? Looking for some feedback.