Piggyback mortgage

Piggyback mortgage

A mortgaging technique used by homeowners to reduce their loan-to-value ratio and avoid the need for private mortgage insurance (PMI). Piggybacking consists of a homeowner either taking on a second mortgage as the original one is refinanced, or taking out two mortgages together. By splitting the total mortgage amount into two loans, the borrower can decrease the ratio of the amount of the mortgage to the value of the home to under 80%, the ratio floor that necessitates PMI. The downside of this method is that the second mortgage typically comes with a higher interest rate than the first mortgage. Piggybacking can also be used on certain types of loans.
References in periodicals archive ?
It declared that a piggyback mortgage was "no more likely to default" than a standard mortgage.
The section features a calculator that helps loan shoppers figure out whether an insured loan or a piggyback mortgage is best for them.
The return of piggyback mortgages (80-10-10s) is a growing concern for industry executives.
And CitiMortgage will continue to offer piggyback mortgages.
Brokers reported that the two prime loan products where supply has dried up the most are 80/20 combo or piggyback mortgages and high LTV loans with private mortgage insurance.
Many industry colleagues I've spoken with have voiced concern about the next component, escalating risk layering in some loan products--the piggyback mortgages, reduced documentation, alternative-A-minus, to name a few--coupled with low FICO[R] scores.