Author bio section
I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
Do you want to reduce interest cost, pay off your mortgage faster without making a significant difference to current spending or saving habits? If your answer is yes, then the revolutionary new loan, called “All in One” is your answer.
The two biggest problems with conventional mortgages are:
- The majority of the payment in the initial years goes towards interest, substantially increasing the total cost of borrowing. A $500,000 mortgage at 3.5% will have an interest cost of $308,000 in 30 years. That cost goes up to ~$360,000 at 4%. Most 30-year loans take 22 years to pay off just half the principal (see the chart below).
- Even if you want to, you can’t tap into the principal that’s already paid, making most US homeowners house rich and cash poor.
All In One Loan solves both these problems. It’s a home equity loan that works like a bank account. The two biggest benefits being:
- It applies all deposits into the bank account towards the principal first. Since the interest is charged on the reduced principal balance, by reducing principal faster, the interest is considerably reduced. This results in a faster payoff of the mortgage.
- When you need the paid off principal back either for regular expenses or an emergency, it’s available for instant withdrawal. So, you never have to worry about making extra payments towards your principal, knowing fully well, you could still use that money if need be.
All In One Loan is mortgage and banking combined into one. It comes with the following features:
- 30-year loan with 30-year access to equity dollars
- ATM /Debit cards, Checks, Online Bill Pay and ACH
- FDIC and/or NCUA insured deposits
- Monthly online/mailed statements
How is All In One so Effective at Saving Interest?
Because it works like a checking account, cash flow positive borrowers save in four ways.
- First, regular deposits, such as income and short-term savings, drives down All In One Loan principal dollar-per-dollar.
- Second, borrowers don’t spend all of their money on living expenses on the same day. Instead, much of their deposited cash remains idle waiting to be spent for days, sometimes weeks. While cash waits to be spent in the All In One, it keeps their loan balance lower, for longer. Interest is calculated nightly on the lower principal balance which results in less daily interest.
- Third, the money normally budgeted for a traditional monthly mortgage payment no longer needs to be spent. Those dollars are automatically used to keep the All In One Loan balance even lower.
- And finally, extra cash that simply wasn’t needed as part of the borrower’s regular budget, also remains in the account, helping to keep the balance lower for even longer. The lower principal balance along with the interest saved rolls over into each new month as a lower starting loan balance, which has a compounding effect on interest savings.
Isn’t Interest Rate Important?
All In One Loan is an adjustable-rate mortgage tied to the LIBOR index (1-month LIBOR). Add a margin of 3.75% and you will most likely get a rate that is slightly higher than existing conventional mortgage rate.
But what is more important is not the interest rate itself, but the interest paid over the life of the loan. A borrower should take even a higher interest rate loan if it helps them save on the overall interest cost and pays off the mortgage several years sooner than the lower interest rate loan.
Don’t I Lose Out on Tax Savings?
Yes, you do. However, let’s take a look at how tax deductions work on mortgage interest. For example, let’s assume that based on your tax bracket, you could get 33% tax savings on paid interest. That means for every dollar of interest paid, you save 33 cents. But what if you didn’t have to pay the dollar in the first case – won’t you prefer that? That way to save 33 cents, you won’t have to pay a dollar.
Do I Need to Open a New Bank Account?
The All In One Loan pays off your existing mortgages and comes with a fully transactional and secured checking account built-in to it. You are not required to transfer all your savings into that account. You are not even required to deposit all your income into that account. However, it is strongly recommended that you do so to get the maximum benefit of All In One Loan program. By transferring most of your cash reserves and using the new account for direct deposits will rapidly reduce your principal balance without making any change to your lifestyle or budget.
Let’s Compare a Conventional Mortgage to an All In One Loan
See the chart below. The comparison includes a deposit of $5,000 semi-monthly with 20% saving per month.
As you can see on a $500,000 loan with 3.75% rate on a Conventional 30-Year Fixed loan vs All In One, the latter pays off the loan in half the time (14.2 years) saving ~$100,000 in interest cost.
And this is with the assumption that the LIBOR will rise to historical averages. If it stays stable at current levels, the loan will pay off in 12.8 years.
Who Should Not Get This Loan?
This loan is not for everyone. If your credit score is <700, you will not qualify. The loan also has reserves requirements and a conservative debt-to-income ratio calculation. It is available only for Primary Residence and Second Homes (and not available for investment properties).
If you live paycheck to paycheck with very little or no savings, this may not be best suited for you.
Possessing too much available credit through the line of credit could trigger additional (and even reckless) spending by some borrowers. So, if you are not a disciplined budgeter and are fiscally irresponsible, you should not take this mortgage. But, that I guess applies to any kind of mortgage.
This loan program is currently available in the following states – AZ, CA, CO, FL, GA (coming soon), IL, NC, OR, VA (coming soon), WA
Apply Now For an All In One Loan and Pay Off Your Mortgage Faster