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Piggyback Mortgages Can Save You From Private Mortgage Insurance

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If you are purchasing your home with less of a down payment than 20 percent your lender may require you to purchase private mortgage insurance to secure your loan.

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Private mortgage insurance pays your lender if you default on the mortgage. The premiums can raise your monthly payment by as much as $200 per month. There are however, steps you can take to avoid paying for private mortgage insurance.

You may be able to take out a “piggyback mortgage.” If you have at least 10 percent of your down payment you can borrow the remaining 10 percent. This piggyback loan will come at a much higher interest rate; however, this interest is a tax deductible expense where private mortgage insurance is not.

There are a variety of lenders that offer down payment loans. These lenders get a premium interest rate for their money and the homeowner is able to make the proper down payment to secure a mortgage loan.

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