What's My Payment? The All In One Loan™
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- Опубликовано: 17 окт 2024
- NOTE: Views and opinions expressed herein are those of Mike Castronovo and are for educational purposes only and should not be relied upon for market decisions. They do NOT necessarily reflect the views of CMG Home Loans or CMG Financial. All In One Loan™ is a registered trademark.
For more information about this and other mortgage products, go to: www.MusicCityMortgageCoach.com
Michael (Mike) Castronovo - Senior Loan Officer - NMLS ID# 19831
CMG Financial - NMLS ID# 1820
CMG Home Loans - Branch NMLS ID# 1093019
810 Crescent Centre Drive Suite 320, Franklin, TN 37067
(615) 914-1799
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CMG Financial™ is a registered trade name of CMG Mortgage, Inc., NMLS# 1820 in most, but not all states. CMG Mortgage, Inc. is an equal housing lender. Tennessee Mortgage License # 109401. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and www.nmlsconsumeraccess.org.
So do you actually put money "down" or does it just sit in the account? In other words, if you're buying a $500,000 house and have $100,000 to put down, do you actually give that $100k to the bank, leaving your AIO loan at $400,000? Or is your loan still $500,000 but you have $100,000 sitting there to be used as equity? Also, how is the amount required to be used as your principal payment each month determined? Is there a set amount and everything you bring in over that amount just gravy? Thanks for the videos, BTW.
I want to know the answer as well
@tutt55, were you able to get the answer ?
@@aikolt1217 Hi, I just replied (reposting in case this goes to your email): Thank you for your question. So in the scenario you outline, the $100,000 would be your 20% down payment. $400,000 in your loan balance, and any deposits (generally income, rent from other properties, business distributions, March Madness Winnings, etc...) anything that you would normally deposit into your checking out, you would now deposit into your All-In-One (AIO) checking account. Think of it like this... 100% of your deposits are essentially paying down your Principal Balance. Only unlike a Traditional Mortgage (TM) where you cannot get those funds back, the AIO allows you 100% access to those funds. For example:
Let's say your income in $12,000/month, and it get's deposited on May 1st. Your principal balance went from $400,000 down to $388,000. On each of the following days; May 5th, 12th, 19th, and 26th, you spent $500 using your AIO ATM Debit Card for Food, Gas, Dry Cleaning. Each of those days, your Principal Balance increased from $388,000 to $388,500, $389,000.. etc...
You took the time to maximize your benefit on the AIO and set yourself up to autopay all your other monthly bills ($5,000) for the month on May 31st. Your Balance is now back up to $395,000. On June 1st CMG looks at what your balance was every night, to calculate the interest that was due for that specific day. Versus your Traditional Mortgage, you were paying interest on the ENTIRE $400,000 every night.
Let's say your AIO interest for May worked out to be $2,000. On June 21st, CMG will add that $2,000 onto your Principal Balance (PB) Taking it from $395,000 back up to $397,000. But your June 1st pay has already come in again for $12,000 (PB = $385,000). Again, you spent $500 on June 5, 12, & 19, so your PB = $386,500.
This process continues, and every night your balance is lowered by what you normally would have kept in checking or savings, is now lowering your Interest Expense.
Let me take it a step further. "What if" question... Let's say this process continues for next two years and your AIO balance is down to $328,000. And you lose your source of income. The following month there is NO deposit. What happens with your Traditional Mortgage? You would have still had to make your $2,500 traditional Principal & Interest Payment, plus come up with funds for all your other payments and expenses. What happens if it takes 6 months before you land a new job? Well after 3 months of no mortgage payments, the bank would have started foreclosure procedures.
Whereas on the AIO, as bad as your scenario is, you never had to make a mortgage payment. The interest would get added to your balance every month, and you would draw on the SAME savings you would have had in your Traditional Scenario (only with the AIO those would have been keeping your Interest Expense lower for that two year).
Assuming you didn't change your spending habits for the 6 months without a job, without ever missing a payment anywhere, your PB on your AIO would now be back up to $382,000 (and that's assuming you had no other savings). If you had no other savings on your Traditional Mortgage scenario, you would have had to scramble to find a way to borrow roughly $66,000 from family and friends to avoid losing everything (since you wouldn't be able to get traditional financing while you're unemployed).
Long explanation, but hopefully that makes sense.
@@musiccitymortgagecoach I am not the original poster of the question, but you clarified a lot of things for me with your detailed answer. Thank you!
@@johnna-l7t Glad it helped :)
This is the best explination of AIO loan ever, what happens to the 13,500 savings you put in earlier or any other money you put in like savings after you have brought the balance to zero and paid off the loan? Is it absorbed into the pay off and if you want to still use that savings is it now just part of the revolving line of credit?
@davetipton7711 Yes. The key feature of the AIO is lowering your interest expense while keeping your spending habits the SAME. For example, if you normally deposit $10K per month and spend $8K per month, what do you normally do with that extra $2K? Some might say "invest it".
But if you have a 6% traditional mortgage today, you're going to spend somewhere in the neighborhood 77% of your mortgage payment on interest over the next 10 years (where as with the AIO, if it's truly a fit for you, you'll be close to, if not completely, paid off).
Think about that. If you send the bank $2,000/month on your 6% mortgage for the next 10 years ($240,000), only $54,422 is going to go toward principal reduction. The other $185,577 will have gone towards interest!
So what kind of after tax return on investment would you need to make in order for that to be a better use of your money?
The next answer people will say is, "Well, I'll just put that extra money into paying down my current mortgage." And while you could, A) you won't pay it down nearly as fast as with the AIO, and B) the reality is most people won't (at least not with 100% of that extra $2K... because as you touched on: What if you need it back for something?
That $13,500 is still available to you right up until near the very end of the 30 year term (at the start of the 30th year you'll still have 1/20th (5%) of your original loan balance available to redraw. At the end of 30 years, it is paid off.
Hi, from the back of the room……How do you qualify for an all in one? Can it be done in place of a refi? Can the all in one be placed in an irrevocable trust for retirement purposes? Thank you. 🙂
Hello, yes, it can be done on a Purchase or Refinance. Title CAN be held in a Revocable Trust, but NOT in an Irrevocable Trust (very few lenders will allow an Irrevocable Trust).
What’s the current rate for the AOI?
The hardest concept for people to wrap their heads around (aside from "What is my payment?") is that "Rate doesn't matter." What matters is your Interest Expense.
As an example I used on another answer within this thread: If you have a 6% traditional mortgage today, you're going to spend somewhere in the neighborhood 77% of your mortgage payment on INTEREST over the next 10 years (where as with the AIO, if it's truly a fit for you, you'll be close to, if not completely, paid off).
Everyone's situation is uniquely different, which is why I help my clients setup and review their scenario in our AIO Simulator. And because it is a variable rate, I always look at, "What happens worst case if rates go up? Even all the way up to the lifetime cap?
Again, your personal numbers will determine if this program is a good fit for you. For example...
I just did an AIO today for a couple refinancing a $589,000 traditional loan at 6.25%. We ran the "worst case" if their AIO rate went up to 14.38% in the first adjustment month and stayed their until it was paid off.
In their scenario, their 6.25% traditional 30 year fixed would cost them $716,569 in total interest expense. The AIO at 14.38% would cost them $196,866 and they would be paid off in full after 6 years and 2 months.
So knowing that, would you rather have an interest rate that is 8.125% lower, or would you rather save $519,703 in true interest expense?
@@musiccitymortgagecoach thank you I have been using the calculator and I need this product I would pay off my house in 5 years
What happens if rates go up, to say double what they are now ........... Is the "all-in-one" strategy still a lot better than a "traditional mortgage ???? Can you do a RUclips on THAT matter please ????
Greg: Yes & Yes! Caveat on the first yes: It depends on your scenario. Keep in mind Interest EXPENSE takes precedence over Interest RATE. That is why it's so important to look at YOUR unique scenario. Because your monthly cashflow (income vs expense) has the biggest impact on whether or not this will work for you (and I always try to stress that this does NOT work for everyone).
Within the calculator we can "stress test" all the "what if" scenarios. What if the Fed raises rates 4 more times, 8 more times, or more? You don't have to be an economist to realize that a couple more rate hikes would cripple the economy AND bankrupt the U.S. (at current rate levels, the interest to fund the U.S. Debt is about $1.7 TRILLION per year. We've gone from $22 TRL to $35 TRL in debt over the past 5 years alone). Even so, it's good to know what happens if it goes to the Lifetime Cap (6% above your start rate) in starting in month 2 and NEVER comes down again. For many of my clients, even if you take it to that extreme, the AIO still works out better than their current 3.5% traditional mortgage.
Several videos (including one discussing this) that I intend to get done as soon as possible. Thank you for letting me know that this would be a good one to make a priority!
I would be interested to see what the standard mortgage numbers would be paying the extra $300 every month
ruclips.net/video/Bq_Erpz6dnI/видео.htmlsi=vIrAxbdiYqRmlTyu
I just posted this NEW video answering that very question. Here's the link!
Is the All in One Loan work same as the HELOC?
Technically, it is a "First Lien HELOC", however there are some key differences and benefits with the All In One (AIO). The biggest in my opinion is the Line availability for 30 years on the AIO. Most HELOCs become fully amortizing loans after the first 10 years (depending on the terms, that can be a massive jump in payment).
Second, I've seen too many examples of financially solid people wishing they had access to their funds 10+ years down the road, whether for opportunities or the unforeseen challenges of life. HELOC's are unfortunately sold with the assumption that, "you'll just take out a new HELOC in 10 years". With the AIO, you don't have to worry, "What if things in my life change and I no longer qualify?".
Third, the bigger fear with a HELOC is having your Available Line of Credit reduced prematurely. The AIO allows you to be as aggressive as you'd like to be on your paydown, knowing that you have immediate access to those funds at any time.
Fourth, if your using an "Accelerated" or "Velocity" Banking strategy you not only lose the lag-time between your moving money between accounts, but you also have to manage the process manually using a HELOC. The AIO is all automated for you (and there's no expensive training or software to purchase to help you try to "safely maximize" your benefit using a HELOC, vs. "Fully Maximizing" it with an AIO).