A Plus Mortgage Solutions, Inc. offers mortgage programs for both first and second mortgages including first and second combination loans.
A first and second combination is useful for clients who are putting less than twenty percent down on a purchase and want to avoid paying Private Mortgage Insurance (PMI). PMI is insurance that a lender requires a borrower to pay for that covers the lender in the event that the borrower defaults on the mortgage. It does NOT benefit the borrower in any way.
The PMI rule only applies to conforming first mortgage programs. So, in order to avoid paying PMI, a client can take out a first mortgage up to eighty percent of the purchase price and a second mortgage up to fifteen percent of the purchase price. Thus, only putting five percent down, but still avoiding PMI because the loan to value on the first mortgage is less than or equal to eighty percent.