Did you hear McLean Mortgage now offers a Piggyback HELOC? What exactly is a Piggyback HELOC? A Piggyback Home Equity Line of Credit (HELOC) can give you the flexibility to improve your home or invest for the future by allowing you to borrow from the equity in your home and receive the money as a line of credit. 

Why should you consider a Piggyback HELOC? 

Avoid Primary Mortgage Insurance (PMI) 

One of the most favorable aspects of a piggyback loan is to avoid paying PMI. Typically, borrowers with a down payment less than 20 percent of the home’s price will need to pay for PMI. For example, a borrower that can afford a 10% down payment would typically pay for the first 10% of the home’s price with their down payment, and the remaining 90% of the price with a mortgage that requires PMI. 

Can be combined with a Conventional Loan for a lower down payment 

With a Piggyback HELOC, lenders structure a loan differently. Say you are purchasing a home with 10% down payment, 80% mortgage, and a 10% “piggyback” second mortgage. You are still borrowing 90% of the value of your home, but your first mortgage is only 80%, giving you the benefits of lower interest rates.  

Can assist the borrower with major investments 

With the 10% piggyback second mortgage, that money can be used for any number of things: home renovation projects, education expenses, future investments, etc. With a HELOC, borrowers will still have to pay this off just like they would a credit card, but it can be a good way to finance your current or future financial goals. 

Avoid Jumbo Loan Interest Rates 

If you are in the market for a more expensive home, you might be able to avoid the lending limits of jumbo loans. Say your local laws have a lending limit of $700,000. You can put down $80,000 on an $800,000 home but need to finance the rest. Instead of taking a jumbo loan with a higher interest rate, you can take out a piggyback loan of $20,000 to cover the difference.