19 Dec 07 
The New Combo Loan
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Any home loan over 80% of a homes value requires that the homeowner takes out a mortgage insurance policy. Traditionally, a Combo Loan has been a term used to describe the process when a home buyer takes two loans out on a property to avoid mortgage insurance. The first loan is typically at 80% of the homes value; the second loan makes up the other 20%, or the percentage that is left over after the down payment. This loan is also commonly referred to as an 80 – 20 loan or a 100% financing loan.
More recently, lenders are using the term Combo Loan to describe the process of bundling all or most of the consumer’s dept into one large loan with a low interest rate. This loan would include the home loan(s), car loan(s), and credit card debt; other consumer debt may also be included. The benefit to the consumer is that their debt is consolidated into one or two monthly payments, it becomes preferred debt and they lower their monthly bills. Another benefit of a Combo Loan is that it doesn’t affect the consumer’s credit rating the same as other popular consolidation programs.
There are several Combo Loan programs available. In most cases, the Combo Loan program is setup so that the borrower makes two monthly payments or takes out two different loans. One loan is setup on a 30 year payment plan and the second is setup to be paid over 15 years. There are many more options available so before considering a Combo Loan, be sure to seek advice from a qualified professional. Make sure you weigh the benefits against the costs as these loans are not for everyone. Often, consolidating debt into one loan can free up extra money each month which will allow you to save more or put more money toward your current debt.
Tags: 80 / 20 loan, combo loan, debt to income, eighty twenty loan, financing, home loan, mortgage loan, preferred debt
Reader's Comments
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This seems like a great way to combine debt and lower monthly payments. I’ve seen some advertisements about this new program on television lately.
These loans are an excellent way for some people to consolidate their debt into a lower interest rate and monthly payment.
Thanks for the information. It seems like the Combo loan is the way to go if you have debt and are looking to refinance.
Yeah this program is still around. A friend of mine actually went through with a combo loan and it worked out well for them saving them nearly $1k month.
I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.
Do your homework done first if you are thinking about taking out a loan or mortgage. The time spent looking into your options can save you a good deal of money later on.
Isn’t the Combo loan now more similar to a debt consolidation loan? Here in the UK we don’t have Combo loans although I did hear someone recently saying that they wanted to ‘Combo’ all their debts into one loan.
There are not many split-loan options available on today’s market. The “combo” referred to is actually only one loan in most cases. There is a major difference in rates, program options, and mortgage insurance when the combination of debt is equal or greater than 80% of the home’s value, so shop around before you make a decision. Debt consolidation can be a life saver, but can also get people into trouble if they finance a major portion of their home’s equity and still contunue to spend more than they make.
This information is valuable nowadays with how the economy is working.
Ff. up to the comment above: Indeed, this could be a life-saver for some who knows how to manage their money.
Thanks for the information!
These combo loans are great if you are looking to pay off multiple debt’s at one time. Plus it does not effect your credit score like some debt consolidation plans.