I have located a potential lease option deal that looks pretty good except for one thing- the seller said that the he has a " “split mortgage 70/30” which I am pretty sure means that each portion if financed differntly - on fixed, one adjustable. It is 2 yrs old & thru Wells Fargo. Is this type of mortage know by a different name? I tried to google it & came up with very little- except for sites in the UK. I do not want to proceed until I know exactly how it works so appreciate any input from someone who has knowledge of this
thanks in advance!
Chances are that your seller has a first and second mortgage that have a combined loan amount nearly equal to the value of the house.
70% of the combined loan amount is in his first mortgage and the remaining 30% is in his second mortgage. Each mortgage has a different rate and loan term. There is a chance that the second mortgage is really a HELOC rather than a fixed rate loan.
You most commonly hear these loans called “piggyback” loans. In this case, the lender made a conforming loan for 70% of the purchase price and then used the equity in the property to give the borrower a 30% second mortgage loan or HELOC loan so that the property could be purchased with 100% financing without need for PMI.
Dave, thanks so much for the clear & prompt explanation =,the many different terminologies can be confusing to a new investor for sure. At least now I will hopefully be able to ask intelligently about this to the seller & his mortgage company. wish me luck!