Cheryl Knowlton: Hi everybody, Cheryl Knowlton, Dynamite Productions, coming at you with Clay Johnson…
Clay Johnson: Hello.
Cheryl Knowlton: For episode five of Mortgage Insurance. Okay, some really cool things related to jumbo loans and what we in the industry use to refer to 80/10/10.
Clay Johnson: Yeah, there’s still a kind of terminology and something that can be very strategic in certain cases. We see that more in the jumbo or arena where we’re saying, okay, we have this loan now on jumbos we can do 5% or 10% down, but if we want to avoid the mortgage insurance, we’re going to need to break that into a couple of different parts.
We do an 80% first mortgage, a 10% second mortgage or home equity line of credit, and then they’ll bring in 10% of their own funds. So you can do that. By doing that you avoid mortgage insurance. What people love about it is they have that second mortgage, they focus all their extra payments on that first, get rid of that, and then that payments no longer there, moving forward on that second mortgage and they have just the first mortgage payment.
Clay Johnson: Yeah.
Cheryl Knowlton: Yeah.
Clay Johnson: So we like that, it’s a great situation. In certain cases we can also do an 80/15/5 exact same setup, with just 5% down. There are some cases that make a lot of sense. What we have to look at sometimes our adjustments there for that second mortgage when you go to that high of a loan to value with a first and second combo, but we always analyze that to make sure it’s going to be the best thing for everybody that we’ll work with and kind of run some side by side comparisons for them.
Cheryl Knowlton: One of my biggest takeaways from all of that is you need to partner with somebody who is fabulous, who knows exactly what they’re doing, is going to custom fit your situation to the very best mortgage product for you. This is not a one size fits all kind of a situation by any means. Yeah.
Clay Johnson: There are places that do it that way, which is not how we operate.
Cheryl Knowlton: No, this is not the Gap.
Clay Johnson: No it’s not at all.
Cheryl Knowlton: This is custom tailoring just for you. We hope you’ve enjoyed this segment that we’ve done for you this week on Mortgage Insurance, and we will see you at our next series.
Clay Johnson: Bye.