Piggyback Mortgage Calculator

Piggyback calculatorImagine being able to effortlessly compare different scenarios for combining first and second mortgages, determining PMI costs, and understanding how these factors impact your monthly payments and overall loan terms. With the piggyback mortgage calculator, you can do just that. This innovative tool not only demystifies the intricacies of piggyback mortgages but also puts the power in your hands to find the most cost-effective solution for your unique financial situation.

Say goodbye to guesswork and hello to clarity as we delve into this game-changing calculator that's revolutionizing how homebuyers approach their mortgage strategy.

  Piggyback Loan & Payment     Combined Piggyback Payment
  Enter Sales Price     1st Loan Payment  
  Piggyback Loan     2nd Loan Payment  
  Down Payment     Total (1st & 2nd)  
  Annual Real Estate Taxes     1/12 Real estate taxes  
  Annual Homeowners Ins     1/12 Homeowners ins  
  Other (annual)     Other  
        Total Monthly Payment  
         
  1st Loan Payment     2nd Loan Payment  
       
  Term     Term  
  Mortgage Amount     Mortgage Amount  
  Payment     Payment  
         

What is a Piggyback Mortgage Calculator?

A piggyback mortgage calculator is a tool that helps you compare the costs and benefits of taking out two mortgages instead of one.

A piggyback mortgage combines a first and second mortgage, usually used to avoid paying private mortgage insurance (PMI).

PMI is a fee that lenders charge borrowers who make a down payment of less than 20% of the home’s value. PMI protects the lender in case the borrower defaults on the loan.

A piggyback mortgage calculator can help you decide whether taking out a second mortgage is worth saving money on PMI. It can also help you determine the best combination of loan terms, interest rates, and down payment amounts for your situation.

How Does a Piggyback Mortgage Work?

A piggyback mortgage works by splitting the loan amount into two parts: the first and the second. The first mortgage covers 80% of the home’s value, while the second covers the remaining 10%, 15%, or 20%. The borrower makes a down payment of 5%, 10%, or 15%, depending on the type of piggyback mortgage.

The most common types of piggyback mortgages are:

  • 80-10-10: The first mortgage covers 80% of the home’s value, the second mortgage covers 10%, and the down payment is 10%.
  • 80-15-5: The first mortgage covers 80% of the home’s value, the second mortgage covers 15%, and the down payment is 5%.
  • 80-20: The first mortgage covers 80% of the home’s value, the second mortgage covers 20%, and the down payment is 0%.

The borrower avoids paying PMI on the first mortgage by taking out a second mortgage since the loan-to-value ratio (LTV) is 80% or less.

However, the borrower has to pay interest on both mortgages, which may be higher than the PMI rate. The second mortgage may also have higher fees, shorter terms, and variable interest rates.

How to Use a Piggyback Mortgage Calculator

A piggyback mortgage calculator can help you compare the monthly payments, total interest, and total cost of a piggyback mortgage versus a single mortgage with PMI.

To use a piggyback mortgage calculator, you need to enter some information about the home purchase and the loans, such as:

  • The home price
  • The down payment amount, or percentage
  • The loan term (in years) for both mortgages
  • The interest rate for both mortgages
  • The PMI rate for a single mortgage

The piggyback mortgage calculator will then calculate and display the following results:

  • The loan amount for both mortgages
  • The monthly payment for both mortgages (principal and interest only)
  • The total monthly payment for both mortgages (including taxes, insurance, and other fees)
  • The monthly PMI payment for the single mortgage
  • The full monthly payment for the single mortgage (including taxes, insurance, PMI, and additional fees)
  • The genuine interest paid for both mortgages
  • The real interest paid for the single mortgage
  • The total cost of both mortgages (including interest and fees)
  • The total cost of the single mortgage (including interest, PMI, and fees)
  • The difference in monthly payment, genuine interest, and total cost between the two options

You are using the piggyback mortgage calculator to compare different scenarios by changing the input values.

For example, you can see how the results change if you increase or decrease the down payment, the loan term, or the interest rate. You can also compare different types of piggyback mortgages, such as 80-10-10, 80-15-5, or 80-20.

What Are the Pros and Cons of a Piggyback Mortgage?

A piggyback mortgage has some advantages and disadvantages that you should consider before choosing this option. Here are some of the pros and cons of a piggyback mortgage:

Pros

  • You can save money on PMI, which can be expensive and not tax-deductible.
  • You can lower your LTV and qualify for a lower interest rate on the first mortgage.
  • You can increase your home equity faster by paying the second mortgage sooner.
  • You can deduct the interest on both mortgages from your income taxes up to certain limits.

Cons

  • You have to pay interest on two mortgages, which can be higher than the PMI rate.
  • You must deal with two lenders, two payments, and fees and closing costs.
  • You may have difficulty refinancing or selling your home since you must pay off both mortgages.
  • You may have a higher risk of defaulting or foreclosure since you have less cushion in case of financial hardship.

Key Takeaway

A piggyback mortgage calculator is a valuable tool to help you decide whether to take out two mortgages or one mortgage with PMI.

A piggyback mortgage can help you save money on PMI, but it also has some drawbacks that you should weigh carefully.

A piggyback mortgage calculator can help you compare both options' monthly payments, total interest, and total cost and choose the one that suits your needs and goals.