Combo Loans

A combo loan is when a second mortgage is taken at the same time as a first mortgage in order to reduce or eliminate private mortgage insurance and allow the borrower to buy the home with a smaller or no initial down payment.

Borrowers commonly use Combo Loans to avoid jumbo financing, which carries a higher interest rate than conforming loan amounts. It's also a way to eliminate private mortgage insurance. If you pay off the second loan, your monthly mortgage expenses will decrease, as opposed to making substantial prepayments on a larger fixed rate loan. Both loans are processed and closed simultaneously, although they are serviced individually.

With Combo Loans, the interest on the second mortgage may be tax deductible. The first mortgage can be conforming thereby avoiding higher interest rates associated with jumbo loan financing. The Second mortgage can be pre-paid with no penalty and may amortize over 15 or 30 years resulting in quicker equity build up or carry a lower monthly payment.

Call and speak with us today and one of our Loan Professionals can guide you toward the best loan option for your needs.