Finance
A 'piggyback loan' (80-10-10 mortgage) in Mississippi involves:
ATwo lenders sharing a single mortgage
BAn 80% first mortgage, a 10% second mortgage, and a 10% down payment—avoiding PMI✓ Correct
CA government-guaranteed first mortgage with a private second mortgage
DA construction loan that converts to a permanent loan
Explanation
An 80-10-10 piggyback loan combines an 80% first mortgage, a 10% second mortgage (HELOC or home equity loan), and a 10% down payment. This structure avoids private mortgage insurance while allowing the buyer to put less than 20% down.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Math Concepts
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