DESCRIPTION

Payments are locked in for the life of the loan.

The interest rate is fixed for a set period, then fluctuates on a monthly or yearly basis.

You make only interest payments for a set period, then principal payments too.

Two mortgages (or a mortgage and a home equity loan or line of credit) at the same time.

YOU'LL WANT ONE IF...

... you're willing to pay for complete predictability. Interest rates are higher, but your payments won't change for the life of the loan.

...you're willing to accept interest-rate risk in exchange for a lower rate and lower monthly payments. The shorter the fixed term, the lower the interest rate.

... you want to keep your payments down in the short term (at the expense of higher payments later.) Interest-only payments can reduce your monthly outlay by about 20%.

... you don't want to cough up much cash for a down payment and also want to avoid private mortgage insurance (PMI). Some use piggyback loans to avoid jumbo mortgage rates.

WHO IS IT GOOD FOR?

Buyers who are likely to stay in the same house for at least seven years or more.

Buyers who are likely to move or refinance within a few years - or are comfortable with interest rate risk.

Buyers who are confident that their income will rise in the future.

Buyers whose PMI would cost more than the interest on the piggyback loan.