Piggyback Loans are a useful financial tool for those in need that can provide the right borrower with a number of positive benefits. These loans can offer borrowers access to the funds they need when they can’t qualify for a conventional loan, save money on closing costs, and even lower their long-term mortgage payments. Piggyback loans are an attractive option for borrowers who are willing to explore their financing options.

A piggyback loan is a combination of two mortgages that are taken out to fund the purchase of a home. The first mortgage is often conventional, while the second is usually a line of credit, a home equity loan, or a second mortgage. By combining two loans with two different interest rates, the borrower can reduce their overall interest rate and save money on closing costs.

In addition to the advantages of lower interest rates and lower closing costs, a piggyback loan can also be a great option for those who do not qualify for traditional financing. Piggyback loans often require a smaller down payment and are easier to qualify for than a conventional loan. For example, borrowers with lower credit scores or higher debt-to-income ratios may not qualify for a conventional loan, but may be able to qualify for a piggyback loan.

Piggyback loans can also be ideal for borrowers who are looking to purchase a more expensive home. By combining two loans, the borrower can access the funds they need to purchase a home, even if a conventional loan would not be enough.

Lastly, piggyback loans can also be used to lower long-term mortgage payments. By taking out a piggyback loan for the first portion of the loan, the borrower is able to reserve the lower interest rate of the first mortgage for the entire period of the loan, rather than having to refinance in the future. This helps the borrower keep their monthly mortgage payments more manageable.

Piggyback loans can offer a number of benefits for the right borrower. Those considering financing for a home purchase should consider piggyback loans as a possible solution for their financing needs.