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split mortgage 80/20

By Terry Savage on December 27, 2015 | Housing / Real Estate

My daughter purchased a condo. Bank did a 80/20 mortgage. her 1st one is with the bank she uses and is at a fair percentage rate. But the second is much higher rate 8-9 %, they are out an foreign bank, Popular, and hard to get in touch with.. Can she renegotiate this loan? Or should she try to pay off? Thanks

Terry Says:  Well Banco Popular is not a “foreign” bank, although it has a Spanish name.  There are several Banco Populares — including those domiciled in Spain and in Puerto Rico.  But if your daughter received a U.S. mortgage loan from them, they are the chartered subsidiary and under the domain of U.S. regulators.   As to your question,  “second loans,” home equity loans, etc always have higher rates than primary mortgages — and they may have floating rates, and/or require only interest payments.  So if rates rise, they can be dangerous to your budget.

I don’t know how a young person was able to buy a condo with no money down (?) and an 80/20 mortgage.  That seems impossible these days.  But I definitely would advise her to pay off that second loan ASAP!  At that point, if she has at least 20 percent equity in her condo, she may be able to refinance at a much lower rate.



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