Question: I am buying my first house. The purchase price is 500K. I am self-employed > and will be putting down 10% in cash and financing the remaining 90%.
> To avoid the monthly PMI payment, I would like to do an 80/10 loan, with 80% > financed via a 10/1 ARM (5.65%) and the remaining 10% financed via a second > mortgage (5.45%).
> I am having trouble getting the second mortgage because I was told I
Answer: While I agree about credit systems being screwed, discriminating against the self-employed and against people who haven’t been much in debt before, I would hardly call it frugal to buy a $500K house and have a $450K debt.
The best way to guarantee not paying PMI would be to buy a $250K house instead and pay a 20% down payment.
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