Most homeowners face the same dilemma: you want to put more money to your home so you will be paying lesser interest in the long term but at the same time, you want to have some cash handy in case of emergencies and you need money in short term.
The all in one mortgage or also called accelerator mortgage has been created to solve this issue.
All in One Loan – How Does It Work?
All in one loan combines your savings and checking accounts, home equity line of credit, and mortgage in such a way which lets you have your extra income put into paying off your home. Your home becomes your savings account but with relatively higher return rate.
The checking account from all in one loan is used exactly the same as others. You pay your bills, deposit your paycheck, buy groceries and others, but everything is tied to the mortgage loan. Any surplus income you got will be going to your home mortgage.
Benefits of All in One Loan
Even though you can pre-pay your house mortgage without the use of an all in one loan, the moment you send the extra money to the lender, you will no longer have any access to this. Yes, you can possibly take out home equity loan yet this will not provide an instant liquidity and flexibility in the same way that all in one loan can do.
This is a great tool for those who are well disciplined and would like to pay their mortgage faster and are worried that they might unexpectedly need cash. What makes this attractive is that there are some people who are hesitant in paying down their mortgage as they are afraid that they will need some cash for emergencies. They are probably worried that their car will break down, they will go unemployed, or their child will have to go to college so they want instant access to money when they need it the most. If they don’t, they will be paying less interest.
Things to Consider When Looking into All in One Loan
For someone who is responsible enough, an all in one loan is not really a bad deal. Provided that you spend less than what you earn and you let the excess be allotted for your mortgage, you are going to save cash on interest. But, if you constantly overspend or you borrow frequently from your HELOC, you might end up making things worse. It may take you much longer to pay your mortgage, and you might have to spend more cash in the long run since you will be paying more interest. Also, there are annual fees or frequently upfront points involved.
Just remember that there are many financial experts questioning the wisdom of allotting any extra cash on your mortgage. People find it interesting because of the cumulative savings in the loan’s life. However, with the current low interest rates, you might be better off if you put your cash to work in other ways like through a 401(k) plan or the IRA which can form a nest egg that is larger than what the interest will save.
Posted by Randy Blakeslee - GetnSocial
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