Network Mortgage Rolls out Newest Alternative to "Piggyback" Loans

NetVantage a benefit to consumers seeking a lower cost home loan

(PRWEB) December 16, 2004 -- Network Mortgage has announced the rollout of its newest conventional loan program, which allows for financing with as little as 5% down without the need for secondary financing or borrower paid mortgage insurance. The program, which the company has dubbed the NetVantage, is available to borrowers that may be short on a large down payment, but do not want to pay mortgage insurance or be subject to rising payments that are often associated with Home Equity Lines of Credit (HELOC).

In the past, many buyers have sought to avoid paying mortgage insurance (MI) premiums by piggybacking second mortgages or equity lines of credit on behind conventional first mortgages. The combination of first and second liens allows down payments anywhere from zero to 15 percent, without mortgage insurance. Typically, lenders require mortgage insurance whenever borrowers buy houses with less than 20 percent down.

While that type of financing has been popular, many consumers are now finding themselves with increasing monthly payments, making it a more expensive financing option. Home Equity Lines of Credit are typically tied to the prime lending rate, which has increased five times this year. Further, most HELOC loans do not require any principal payments, which means the consumer has to rely on appreciation alone in order to build equity.

The Network Mortgage program offers what a company representative states is simply a better way to finance a home: One low fixed rate mortgage loan, one set of closing costs, and one lower monthly payment. Equally important is the feature it doesnt have: a HELOC payment that is all but guaranteed to rise yet again in early 2005.

This type of program isnt new. In fact, lender paid mortgage insurance has been around for years in one form or another. What makes the NetVantage program shine is the cost structure for the consumer. Weve been able to negotiate a better deal for the consumer than what is typically available from the larger lenders," states Network Mortgage Executive Vice President Kevin Lane, Typically, a borrower will see an increase of at least a half a point (.500%) or more in the interest rate offered (versus the going rate with mortgage insurance or secondary financing). With our program, its less than half of that, which translates into thousands of dollars in savings over the life of the loan. Further, the borrower wont have the hassle of having to incur the costs of refinancing simply to get rid of their ever-increasing home equity loan payment."

Lane states that the program is not for everyone, but simply provides an alternative to what many consumers say are the negative attributes of piggyback financing-extra closing costs, rising variable rates, balloon payments and early payoff penalties. Many loan programs are designed to help a buyer get into a home," he continues, but what weve essentially done is replaced a home equity loan with a home equity builder. What it does is provide the customer with an option that places more of an emphasis strengthening their long term financial health."

Currently the company is offering the program only through its retail lending channel, and gives consumers two down payment options: the NetVantage 90, with 10% down, or the NetVantage 95, with 5% down. The company plans to roll out the NetVantage 100, a zero down program, sometime in early 2005.

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