By Wanda Norge
As interest rates rise, buying or refinancing becomes less affordable, so how about a loan that works to pay off your mortgage faster even with a higher interest rate?
The typical 30-year mortgage provides a low payment for a long time and is the most popular loan product here in the states. It was created during the Great Depression era to make housing affordable. However, there are smarter loan products used by other countries for years with extremely low default rates.
Save tens of thousands of dollars in interest by paying your principal down faster (in half the time or less) just by doing your normal banking deposits and bill payment withdrawals. As long as you are making more than you are spending this works – which is really the situation you want to be in anyway, right?
This loan combines the mortgage with the banking account.
It applies any deposits coming in toward principal first, where the 30-year mortgage payment is heavy on interest payments for the first 15 years. So it reduces principal faster, which in turn reduces the interest paid over the life of the loan – thus paying it off faster. The faster you pay down the principal, the less expensive the mortgage becomes – even with a higher rate.
If you make that extra payment on your current loan, then you no longer have access to that money. This loan applies the deposit to reduce the balance calculation, but leaves the money there – available to use elsewhere or for other financial planning purposes.
Closing costs are similar to any other type of mortgage. If the loan is paid off, you continue to use the credit line for the balance of the 30-year term – just like a line of credit.
The interest rate is tied to a LIBOR index plus a margin, but what is more important is not the rate itself, but the amount of interest paid over the life of the loan. Even with a higher interest rate it saves on the lifetime interest cost, and keeps funds available to reuse.
It is great for the self-employed that may get varying cash deposits from their jobs, bonuses, tax returns, rental income, real estate investment lump sums, etc. However, it works for salary or fixed-income borrowers with credit scores over 700, that have 20 percent down for a new primary or second home purchase up to $2 million, (or have equity for a refinance) and manage their money responsibly.
I am happy to provide a free report comparing your current loan and interest rate (basing it on your typical monthly deposits and withdrawals) to show you how it works.
It is just a matter of time before this is a mainstream loan product here in the U.S. Get yours now!
Wanda Norge is a Mortgage Consultant, Certified Divorce Lending Professional (CDLP) with Equilane Lending, LLC (NMLS: 387869), lending for 15 years. Contact her at 303-419-6568, firstname.lastname@example.org or www.wandanorge.com. NMLS:280102, MB:100018754