Debt consolidation is when one takes their credit card debt, their car loans, and other loan type payments and roll it into their mortgage. Why would anyone want to do this? Tax advantages. The interest one pays on their mortgage is tax deductible. The interest one pays on credit card debt, car loans, etc is non tax deductible. Rolling this non preferred debt into preferred debt is one of the ways people are able to make lower payments, increase tax advantages and increase savings. Matthew Rosov is able to help you with this, so contact him now at (410) 788-9100.
When using combo loans as a debt consolidation tool, be sure to have a plan in place as to where the extra money that you will suddenly have on hand needs to go. Your Mortgage Planning Specialist will be able to assist you in working with other professionals - financial planners, CPA's, etc. - on how best to structure your "combo" loan to take full advantage of tax breaks and increased cashflow.
Combo loans are available in a wide variety of terms. Most often you will see a term of 360/180, meaning your 1st payment is your regularly 30 year amortized loan and your 2nd payment is a 15 year loan. However, there are many other options available. Matthew can help you choose which one is best for you. You can reach us at (410) 788-9100.
Combo loans are available in the traditional full documentation process, but also in the stated income and/or limited doc process for self employed borrowers.
Combo loans are increasingly becoming a favorite loan program for first time home buyers and home buyers who do not have enough money to come up with a down payment. These types of combo loans are commonly referred to as 80/20 loans and 100% financing combo loans. By doing an 80/20 combo loan you are able to buy a home with no down payment required and you are able to avoid the much dreaded PMI, or Private Mortgage Insurance. Private mortgage insurance is a type of insurance that is required by the lender when you do not have at least 20% to apply towards a down payment when you are buying a home. Combo loans can help save you a lot of money when buying a home with little to no money available for a down payment.
Combo loans are available to borrowers of all credit types. Even with a 580 score you may still be able to qualify for the tax and money saving advantages that a combo loan can offer.