Yesterday when i called Mortgage company ( Countrywide) to get preapproval letter, he said i have to take Mortgage insurance since i am not putting 20% down payment. Then he suggested me to take out more than one Loans and i can get around the Mortgage insurance.....i smell something fishy here...Can anybody suggest me what are the cons of taking more than one loan? I asked the same question to him but he replied there is no cons except writing out more than one check ?

Is Countrywide good company to take mortgage ? If not can you please suggest some ?

Thanks

PMI (Private mortgage insurance) is usually required when a person puts down less than 20% of the purchase price.

Some people have been taking out loans for 80% of the purchase price, then a personal loan for the 20%, thus paying full amount for the loan and not having to pay PMI.

The pitfall is that you have two loans to pay off and PMI is only required to be carried until 80% of the home's value has been paid off (for example - if the house appreciates, you could get a new appraisal then possibly get PMI dropped, depending on the appraised value). So you could be paying a second loan for a long time versus waiting a few years, getting the home reappraised, then getting PMI dropped.

Countrywide is ok. I am having alot of success with RMC Vanguard .

My wife and I just purchased a home and went through the same thing.

My understanding of it is this...

If you finance more than 80% on a primary mortgage, you have to pay the mortgage insurance.

What we did was an 80/10/10. We put 10% down, had 80% in a primary mortgage at a low fixed rate (5.875%) and the remaining 10% in a variable rate (prime +2%) home equity line.

Hope this helps.

What he is talking about is taking a second lien loan to cover the downpayment. You are on the hook for 2 loans, so make sure you can service them. I can't beleive they are still doing that, given all the mess that they have caused. Generally a lot of those types of loans have defaulted, and one would have thought that they would be limiting the use of them. There is no con if you can service the loans, while I think PMI is paid for completely at closing.