AIO = Home Financing + Personal Banking
It is a first lien position, 30-year term, open-ended mortgage security, or line of credit, with an integrated zero-balance sweep-checking account. In other words, it's a combination home loan and checking account, merging together home financing and personal banking into one easy to use financial tool.
This unique program optimizes income by generating a relationship between dollars earned and dollars owed to lower the cost of financing efficiently and aggressively, with less dependency on interest rates. It eliminates the principal balance faster, lowers payments monthly and keeps money available for use without refinancing.
Where conventional mortgage products are structured with more focus on helping borrowers get into mortgage debt, the All In One Loan was engineered to help borrowers achieve transformational outcomes, like investing in retirement security, funding emergencies or a child's college tuition cost, and mortgage freedom.
The All In One Loan™ can be used for new purchases and mortgage refinances, and applied to single family dwellings, condominiums and town-homes and 2-4 unit multi-family homes, whether occupied as a primary residence, second home or investment property. It can also be used to finance the construction of a brand new primary residence or second home from the ground-up. Speak to a licensed and All In One Loan™ Certified Mortgage Professional for more details on financing allowances.
Works best with clients that have: Good credit & Low debt ratios, (surplus funds after paying all monthly bills).
Advantages & Disadvantages
PRO’s
Since 1985, CMG has not had a default on this loan type, ZERO!!
Lowers the cost of real estate without depending on lower rates.
It’s how interest is calculated.
Lowers monthly payment automatically during the loan without refinancing.
Fewer total payments without increasing the monthly payment amount.
Provides access to home equity for 30-years, without refinancing or getting a second lien HELOC.
Reduces interest paid over life of loan.
Principle is paid first.
Interest is calculated daily as simple interest after principal payments are credited.
Pays off your mortgage much sooner than a typical forward mortgages, (average is 8 to 12 years).
As little as 10% Down Payment; 20% saves you money!
The Index used is the 30-day average SOFR (estimate 1.925% historically).
No pre-payment penalty.
No balloon payment.
Asset depletion available to qualify.
Delayed financing option.
You can close in a Revocable Trust.
cons
It is More difficult to Qualify: higher credit, lower debt ratios required.
Owners have easy access to their home’s equity, which is bad for those who are not financially disciplined.
Escrows (taxes & insurance) not included.
Reserves 10% of the line-amount.
The interest rate is often slightly higher than a forward mortgage.
Q & A
What determines the Amount of the Line of Credit?
Appraisal Value - Down Payment = Max Line of Credit.
Example: If the home is purchased for $700,000 with the buyer putting 20% down, the loan amount would be $560,00. That would be the maximum amount of the line.
One percent hold back is to cover line payment due during the on boarding process, we do this to ensure there is no overlap, due to on-boarding taking 4 to 6 weeks.
What are the Terms?
30-year home equity line of credit with an integrated sweep-checking account.
The credit limit is established in underwriting and is based on borrower qualifying characteristics.
The limit remains unchanged for the first ten years then steps-down each month by 1/240th for the remaining 20 years until it reaches $0. payoff.
What happens when you make a deposit into the checking account?
Deposits are swept nightly to the HELOC-side of the account and applied to loan principal. This makes higher use of idle money in order to save monthly interest expense on the mortgage, even prior to being spent.
There is no restriction on how quickly or how much you role into the line-of-credit.
How do you access money to pay bills?
Deposited cash and home equity dollars become one and remain available for use 24/7 over the 30-year term of the HELOC.
Money can be accessed through the ATM-VISA cards, by writing checks or paying bills and transferring funds online through the All In One Loan bank portal and your mobile device.
Pay it off as quickly as you want
There is no amortized payment schedule to hold you back.
Clients eliminate upwards of 10% of their principal balance annually or more and payoff in half the time or less compared to a traditional mortgage.
The key is your banking behavior. If you spend less than you earn each month, chances are you make a great candidate.
How much can you borrow?
The maximum loan amount is $2 Million; however, exceptions may be made when loan-to-value levels are low.
Can you take cash out at closing?
Cash can be disbursed at closing to help fund near-term financial goals up to 80% of the value of the home to $1 Million, 75% to $1.5 Million and 70% to $2 Million.
For investment properties, there is a maximum amount limit. Check with Ray.
What comes with the checking account?
This account will be available 2-4 weeks after closing.
The checking account comes with all the same features you're accustomed to with a traditional bank account, including ATM Debit Point-Of-Sale (POS) VISA card access, checks, bill-pay, external account transfer, direct deposit, mobile banking and much more. It's a complete checking account w
Before Closing
We underwrite the file in-house and then send to the investor for a clear-to-close and funding.
Servicer of the AIO Loan:
Northpointe Bank & Merchants Bank of Indiana.
They also provide the bank checking account tied to the HELOC.
Account Access Timing
Once we close, several steps will take place to set up and activate the account including the creation of its banking access features for the borrower's use.
A welcome package is mailed to the borrower by our AIO Bank Servicer to the mailing address on file. It can take up to 60 days to accomplish these steps.
Upon receipt of the welcome package, the borrower gains full access to their AIO Line of Credit and can begin using it to manage their cash-flow to help lower their outstanding principal balance and interest cost. Those with strong monthly residual income tend to save the most.
First Payments After The Loan Funds
Interest begins accruing the day the loan funds. As part of the loan's closing structure and to ensure enough credit is available to fund the first interest payment, the maximum initial advance amount cannot exceed 99% of the approved line of credit.
It may take up to 60 days to complete the account set-up and activation. It also provides borrowers with some liquidity once access is received.
The first payment equals the total daily interest that accrues between the day the loan funds to the end of the month activation is completed.
The first payment will draft from the All In One Loan™ Line of Credit on the 21st of the month, or the next business day if the 21st is a weekend or holiday.
As an example, if a loan funded on the 5th of June, which has 30 days, with a $300,000 principal loan balance and interest rate of 3.750%, and the account is activated on the 15th of July, which has 31 days, the first payment would equal the accrued daily interest from June 5th to July 31st (57 days) and be approximately $1,756.85 ($300,000 times 3.750% divided by 365 times 57 days). Therefore, approximately $1,756.85 would be drafted from the line of credit on the 21st of August automatically, or the next business day if the 21st is a weekend or holiday. From that point forward, all interest payments will be based on each months total daily interest expense.
Eligible Borrowers: U.S. Citizens, Revocable trusts, Permanent Resident Aliens, Non-permanent Aliens with certain documentation.
Structure: First lien, 30-year draw HELOC.
Loan Amounts: Primary & Second Homes up to $3M; Investment Homes up to $1M.
Minimum: Initial Draw $100k+.
Draw: Maximum Draw of 99% of line of credit.
Minimum Payment: Interest only.
Ratios: Maximum 40%, possible as high as 43% with 15% reserves
Credit: 700-719 requires 20% down; 720+ allows only 10% Down (with MI).
Down Payment:
Depends on Credit Scores.
Primary Residence minimum 10%+, 2nd Homes 20%, Investments 25%.
First 10% of the down payment must be from the borrower’s own funds.
Gift and grant funds are eligible for the remainder of funds needed for closing.
Reserves Required:
10% minimum of loan amount is required for all transactions.
15% minimum of loan amount required, loans DTI greater than 40%.
Two months’ statements or most recent quarterly statement required.
Reserves cannot be gifted.
Non-U.S. dollar assets are ineligible.
Marketable securities or vested stocks are an acceptable source of reserves, as well as retirement accounts.
The borrower must be able to liquidate funds used to meet the reserve requirement. Accounts that cannot be liquidated are not eligible to be used as reserves.
Debt-To-Income Ratios:
Max debt ratio is 40% with 10% of the LOC in reserves.
Max debt ratio is 43% with 15% of the LOC in reserves.
Qualifying payment is calculated at the qualifying rate at the full loan amount amortized for 30-years.
Interested Party Contribution: 3% maximum
Occupancy:
Primary residence: 1-4 unit, SFRs, PUDs (attached or detached), Condos.
Second homes: 1-unit only, SFRs, PUDs (attached or detached), Condos.
Investment properties: 1-4 unit, SFRs, PUDs (attached or detached), Condos.
Eligible Property Types:
SFRs, including modular (manufactured not permitted), 2-4 units properties.
10-acre maximum (greater than 10 acres requires investor approval), Condos - no litigation permitted
Appraisal: Over $1.5M requires second appraisal. May be transfered with conditions.
Eligible Borrowers: U.S. Citizens, Revocable trusts, Permanent Resident Aliens, Non-permanent Aliens with certain documentation.
Structure: First lien, 30-year draw HELOC.
Loan Amounts: Primary & Second Homes up to $3M; Investment Homes up to $1M.
Minimum: Initial Draw $100k+.
Draw: Maximum Draw of 99% of line of credit.
Minimum Payment: Interest only.
Ratios: Maximum 40%, possible as high as 43% with 15% reserves
Credit: 700-719 requires 20% down; 720+ allows only 10% Down (with MI).
Down Payment:
Depends on Credit Scores.
Primary Residence minimum 10%+, 2nd Homes 20%, Investments 25%.
First 10% of the down payment must be from the borrower’s own funds.
Gift and grant funds are eligible for the remainder of funds needed for closing.
Reserves Required:
10% minimum of loan amount is required for all transactions.
15% minimum of loan amount required, loans DTI greater than 40%.
Two months’ statements or most recent quarterly statement required.
Reserves cannot be gifted.
Non-U.S. dollar assets are ineligible.
Marketable securities or vested stocks are an acceptable source of reserves, as well as retirement accounts.
The borrower must be able to liquidate funds used to meet the reserve requirement. Accounts that cannot be liquidated are not eligible to be used as reserves.
Debt-To-Income Ratios:
Max debt ratio is 40% with 10% of the LOC in reserves.
Max debt ratio is 43% with 15% of the LOC in reserves.
Qualifying payment is calculated at the qualifying rate at the full loan amount amortized for 30-years.
Interested Party Contribution: 3% maximum
Appraisal: Over $1.5M requires second appraisal. May be transfered with conditions.
Occupancy:
Primary residence: 1-4 unit, SFRs, PUDs (attached or detached), Condos.
Second homes: 1-unit only, SFRs, PUDs (attached or detached), Condos.
Investment properties: 1-4 unit, SFRs, PUDs (attached or detached), Condos.
Eligible Property Types:
SFRs, including modular (manufactured not permitted), 2-4 units properties.
10-acre maximum (greater than 10 acres requires investor approval), Condos - no litigation permitted.
Ineligible:
Borrowers: Non-permanent resident aliens that do not meet the eligibility requirements, Diplomats, Irrevocable trusts, Land trusts, Limited and/or general partnerships, corporations, LLCs, and Non-occupant co-borrowers.
Property Types: Mixed use, Property on tribal land, Cooperatives, Leaseholds, Manufactured housing, Unique such as log, dome, earth, and geothermal homes, Condotels. Properties exceeding 10 acres.