Piggyback Loan – Not Lucrative Anymore

There are quite a few things that your mortgage professional will not tell you about. Don’t worry they are not trying to hide these facts, they just don’t know. High up on the list of don’t knows is the fact that piggyback loans are not as good as mortgage insurance. But before we get into details, let’s explain a piggyback. Simply put, a piggyback is described with three numbers that should add up to 100. An 80-10-10 piggyback is one where you get a mortgage for 80 percent of the price, borrow 10 percent as an equity loan or credit line, and make a 10 percent down payment.

There was a time when home equity lines of credit were cheap – they came at 4 or 5 percent. Then, piggybacks were almost always cheaper. However, now with the rates almost doubled, piggyback loans are no longer lucrative as they have higher monthly payments.