Blanket Mortgage

Sometimes you might use a blanket mortgage. This type of financing covers two or more properties under the same lending agreement. For example, say you (or someone else close to you) owns a $800,000 property. Its mortgage balance stands at $300,000. You want to buy a $400,000 property.

If you (and/or others involved) would pledge both properties, a lender could offer a new first mortgage that covers (blankets) both properties for

$700,000—a total LTV of less than 60 percent. This loan would not require PMI or a second mortgage. It could save you money and at the same time provide a "no down payment" purchase. Given this jumbo's low LTV, it should not carry an interest rate much (if any) higher than smaller loans.

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