Paying a little extra towards your mortgage can go a long way. Making your normal monthly payments will pay down, or amortize, your loan. However, if it fits within your budget, paying extra toward your principal can be a great way to lessen the time it takes to repay your loans and the amount of interest you'll pay.
A 30-something investor who is willing to assume more risk in exchange for higher return potential might opt for an 80/10/10 portfolio, with 80 percent of her portfolio invested in stocks, 10 percent in bonds, and 10 percent in cash.
Your first mortgage is for 80% of the purchase price, the second one is for 10%, and you'll make a 10% down payment. An 80-10-10 loan is a tool for sidestepping private mortgage insurance without putting 20% down.
Benefits of an 80-10-10 Mortgage
Lower monthly payment: It's possible your monthly mortgage payment will be lower as you're not paying PMI, even if you're paying off a second loan concurrently. Smaller down payment without PMI: Many lenders require you to pay mortgage insurance if you can't make the 20% down payment.
Because the law allows only the mortgagee to foreclose, MERS had to either file court papers in its own name or transfer the mortgage back to the real owner.
The 80/10/10 budget is just one way this can be done! In this approach, like other popular budgets, 80% of income goes towards spendings, such as bills, groceries, or anything else needed. 10% of income goes directly into savings to ensure that money is added regularly. The last 10% of income goes to charity.
This arrangement can be contrasted with the traditional single mortgage with a down payment amount of 20%. The 80-10-10 mortgage is a type of piggyback mortgage.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
In simple terms… 80/10/10 Raw meal is based on 80% meat, 10% bone and 10% Offal (usually split 5% liver and 5% other secreting organ). For example, our Beef 80/10/10 is 80% beef (skirt, trim etc), 10% bone (non-load bearing), 5% liver and 5% secreting organ (kidney, spleen etc) which makes up the 10%.
The 90/10 rule in investing is a comment made by Warren Buffett regarding asset allocation. The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds.
10-80-10 PRINCIPLE SUMMARY
Every team or organization consists of three groups: The top 10 percent: disciplined, driven, self-motivated, want to be great, and work relentlessly. The 80 percent: the majority—those who do a good job and are relatively reliable. The bottom 10 percent: disinterested and defiant.
Making extra payments of $500/month could save you $60,798 in interest over the life of the loan. You could own your house 13 years sooner than under your current payment. These calculations are tools for learning more about the mortgage process and are for educational/estimation purposes only.
Faster Loan Payoff
By making 2 additional principal payments each year, you'll pay off your loan significantly faster: Without extra payments: 30 years. With 2 extra payments per year: About 24 years and 7 months.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
Quick Take: The 75/15/10 Budgeting Rule
The 75/15/10 rule is a simple way to budget and allocate your paycheck. This is when you divert 75% of your income to needs such as everyday expenses, 15% to long-term investing and 10% for short-term savings. It's all about creating a balanced and practical plan for your money.
Ideally, you want to have 20% of your take-home pay left over after paying all of your bills.
When you don't have 20% to put down, an 80-10-10 mortgage can help. It's okay to dream big. For those who might not have a 20% down payment available, Chevron Federal Credit Union can help with an 80-10-10 mortgage.
The first 10 percent of your income should be set aside in savings. That includes regular, emergency and retirement savings. The second 10 percent is what you give away to charity (schools, church, community). The remaining 80 percent is what you live on.
First Mortgage Plus Second Mortgage = No PMI. Private mortgage insurance (PMI) covers the lender against borrower default. If you borrow more than 80% of the value of a home when you refinance you will be required to pay PMI.
80/10/10 Loan Details
80% comes from your first mortgage. 10% comes from a second home equity mortgage. 10% comes from a cash down payment, which is determined by the purchase home price. No private mortgage insurance (PMI) is needed even if your down payment is under 20%.
This estimate is called the “10-80-10 Rule.” It states that just 10% of people would never commit fraud for any reason, another 10% of people are actively looking for opportunities to commit fraud, and the remaining 80% fall somewhere in between.