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mommy2Two
LIF Infant
Member since 3/07 218 total posts
Name:
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Explain to me difference between PMI & 2nd mortgage
i'm confused why people are telling me that taking a 2nd mortage (home equity loan when you got your mortage) is better than pmi. i think money wise, pmi comes out less.
let's say you needed $100,000 to put down or have pmi. (which is my case.) my pmi is $250/month. if i had taken $100,000 in future equity and rate of 7% and 30 years, payment per month $665/month. And taxes, you get back 30% on interest for that loan. (correct me if I am wrong) still more than pmi.
so how is it better to take out a 2nd mortage versus pmi?
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Posted 10/16/07 5:00 PM  |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Explain to me difference between PMI & 2nd mortgage
Might work out to a lower monthly payment, but PMI is not tax deductible, whereas the interest on your second mortgage is.
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| Posted 10/16/07 5:13 PM |
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BlueDiamonds
mommy to 3 boys
Member since 2/07 3885 total posts
Name:
proud mommy
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Re: Explain to me difference between PMI & 2nd mortgage
if your mortgage is over $415K, then it will be considered a jumbo loan with a much higher rate. so you have to consider that when you compare 1 mortgage w/PMI vs 2 mortgages w/o PMI.
and i would like to add that you won't be paying PMI the full 30 years of the mortgage. once you've paid off some of the mortgage and the home appreciates in value, you can get rid of the PMI.
Message edited 10/16/2007 8:58:23 PM.
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| Posted 10/16/07 8:55 PM |
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laurabora
LIF Adult
Member since 4/07 2712 total posts
Name:
Laura
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Re: Explain to me difference between PMI & 2nd mortgage
I was trying to reason this through with my DH too. I thought it would be wiser to do the PMI thing but he disagrees. I'll be interested to see the responses.
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| Posted 10/16/07 10:08 PM |
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MrsFlatbread
Skinny jeans are in my future
Member since 6/06 10258 total posts
Name:
Baby Momma
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Re: Explain to me difference between PMI & 2nd mortgage
we got a second mortage rather than pay pmi. Our second mortgage is minimal and we should have it paid off within the next two years. With the interest rate we got on our second mortgage it makes more sense for us to do it this way.
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| Posted 10/16/07 10:41 PM |
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Jacksmommy
My love muffin!
Member since 1/07 5819 total posts
Name:
Liz
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Re: Explain to me difference between PMI & 2nd mortgage
PMI is extra money you have to pay...Aside for it not being tax deductible, paying it doesn't help you build up anything. Taking the second mortgage allows you to pay more into the house at the same time you are paying the first mortgage, so in essence you are building equity!
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| Posted 10/17/07 6:11 AM |
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VickiC
Rocking the party
Member since 5/05 4937 total posts
Name:
Vicki
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Re: Explain to me difference between PMI & 2nd mortgage
We also took a small HELOC for the rest of our mortgage. The intro rate was tiny and even when it goes up to full rate, it's still better than some of the other rates I've seen. Plus, we felt with the HELOC that we have some flexibility if we need to add more money to it in the near future to get the house dormered. Plus, the interest is tax deductable!
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| Posted 10/17/07 8:35 AM |
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mommy2Two
LIF Infant
Member since 3/07 218 total posts
Name:
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Re: Explain to me difference between PMI & 2nd mortgage
Posted by ejm1219
PMI is extra money you have to pay...Aside for it not being tax deductible, paying it doesn't help you build up anything. Taking the second mortgage allows you to pay more into the house at the same time you are paying the first mortgage, so in essence you are building equity!
i don't understand
if you took out a second loan (equity) and have a first loan.
even though you are paying more into your 1st loan how are you paying more into your house?? if you have an equity loan and equity loan=more you owe on the house. you still owe the equity loan. how it it better to owe both and call it "paying more into your house".
versus if you have only a 1st mortgage and equity keeps building anyhow.
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| Posted 10/17/07 3:21 PM |
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Jacksmommy
My love muffin!
Member since 1/07 5819 total posts
Name:
Liz
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Re: Explain to me difference between PMI & 2nd mortgage
Posted by mommy2Two
Posted by ejm1219
PMI is extra money you have to pay...Aside for it not being tax deductible, paying it doesn't help you build up anything. Taking the second mortgage allows you to pay more into the house at the same time you are paying the first mortgage, so in essence you are building equity!
i don't understand
if you took out a second loan (equity) and have a first loan.
even though you are paying more into your 1st loan how are you paying more into your house?? if you have an equity loan and equity loan=more you owe on the house. you still owe the equity loan. how it it better to owe both and call it "paying more into your house".
versus if you have only a 1st mortgage and equity keeps building anyhow.
Because instead of that $200 dollars or whatever going to PMI, I am putting $200 into a mortgage - some of which is intrest, but all of which goes to paying the other 10% of my house off.. . The other 200 dollars if I had to pay PMI would go to nothing! Im probably not making sense but it makes sense to me! lol
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| Posted 10/17/07 5:01 PM |
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