Second Mortgage

To avoid PMI, you can try second mortgage to cover down payment.

You have to know the dangers of a second mortgage and you must make sure how does paying it off work. And it is important are you able to refinance both mortgages eventually into one mortgage.

So theimportant question here can be: would be save more money (in fees and such) by just putting down the 20%? or is it better being invested?

Getting a second mortgage or COMBO loan is one way to avoid putting 20% down. However ,depending on your score you may be able to get 100% financing without a COMBO loan. Also,you don’t have to have PMI if you go through a sub-prime lender.

You could also do a seller carried second (commonly called fix rate note) to pay your down payment if needed. It is important that you must first qualify for a 100% financing through a mortgage broker.

The rest of the ideas would not even come into play if you qualify. Finally, you can refinance a COMBO into one loan at a latter date,and you have the option of paying off either side of the COMBO at any time.

You can ask all your questions that should be answered by qualified mortgage broker. If you are working with one ask him/her all of these questions and if you are not, than find some one in your area. You should also consider talking to a financial planer, he/she will explain to you the benefits and pitfalls of investing your down payment.

If you can afford making the payments for your new home without any financial hardship, invest the money into less risky investments. You will not get 10% as mutual funds would pay, but you may still be able to get good return on your money and have less risk involved.

One of the great benefits of home-ownership is having income tax deduction, which in the case of 100% or 80% / 20% financing would be substantial. Do not be afraid of PMI, if it would be a better deal for you to pay it (must have more info if it would be a better deal), you can always refinance at the later date when the property value will go up and you have 20% equity.

You can refinance both 1st and 2nd mortgage into one loan if it would make sense at the time.