Why have I never heard of a Combo Mortage?

Question

I was talking with a friend today and he told me about the possibility of getting a conventional loan along with a second morgtage to help "offset" the initial down payment to technically avoid PMI and the 20% down requirement.

When I read more about it I got very excited! But why isn't this talked about more?

Do any of you have experiences with a Combo Mortgage? If it is what I expect it to be, I would be looking into getting a combo mortgage for my wife and I on a home in ATL as a primary residence and use the additional money that we'd otherwise spend to meet the 20% down payment as more investment capital, instead of grinding it out to save that amount of cash and emergency fund back up to par for other purchases.

Also, if one does go with a Combo Mortgage (I'm calling it that because I don't know if there is some other official name it goes by), how do HELOCs work with that? Because technically I wouldn't have a high amount of equity in the property.

Roman M. · Answer

2nd loan will be a heloc and the rate is north of 6 % and is adjustable. We all know the rates will be going up so it's not for everyone.

David Wandel · Answer

Did a few of these in '06-'08. We called them 80/10/10. Ten % down 10% second mortgage. Don't know if they are still around or not. They were no doc to boot. Fun Times

Craig Jeppesen · Answer

Pretty common especially for first time buyers. You won’t be able to get a heloc as you won’t have any equity.

Jill F. · Answer

I've heard it called a piggyback mortgage. Guess that doesn't sound too professional.

Craig Jeppesen · Answer

You just get a normal heloc when you have built up the equity. If you still have the piggyback 2nd with a small balance the heloc will be in third position. You could always payoff the piggyback 2nd with the new heloc and still only have two loans.

Evan Parker · Answer

@Jill F.

Ha! I like that name much better than Combo Mortgage actually.

Makes me feel like I'm placing an order in the drive through lol.

Hmmm, a drive through mortgage company...?

Be right back, working on a new business plan.

Evan Parker · Answer

@Craig Jeppesen

Well of course I wouldn't be able to get one immediately, assuming enough time has passed for equity to be there, how would it work?

Because technically the equity isn't there, the value is just bundled in another mortgage

Why have I never heard of a Combo Mortage?

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