FAQs

1.  
   Why Hasn't the All-in-One Loan Been Available in the United States Until Now?

   Banks have historically dominated the mortgage market and make money by paying small interest rates on deposits, then loaning that money back out in the form of mortgages, earning a profit on the "spread" between their loan rates and deposit rates. The All-in-One Loan is not a profit center for traditional banks; hence, they've never offered it.

2.  
   How Do Lenders Make Money on this Loan?

   As mortgage brokers and bankers, we make money on originating the loan and marketing the underlying financial asset to investors in the secondary market.

3.  
   Will my All-in-One Loan Be Sold? Who Will Service It?

   We work with CMG and its servicing partner, Ameriprise Bank, who services the loan and powers the transactional aspects of the product (the ATM card, checks, electronic transfers, etc.).

4.  
   What Is my "Credit Line"?

   Your credit line is the maximum amount you can borrow under the terms of the agreement. This is usually higher than your first draw amount, which is typically used to pay off an old mortgage (in a refinance) or complete a purchase transaction. Your credit line remains the same throughout the 10-year, interest-only period, then declines by 1/240 per month throughout the subsequent 20—year repayment period, reaching zero at the end of the 30-year term. You'll need to keep your principal balance below this line throughout the term of the loan, meaning that you will need to be making progress against paying down principal during the final 20 years if you have borrowed the full amount.

5.  
   How Do I Make Payments?

   Every time you make a direct deposit of your payroll or add funds from another account, you're — in effect — making a payment. At the end of each monthly statement period, a charge for interest is added based on your daily principal balance. This charge is simply added to your principal balance. You actually owe interest—only for the first 10 years; after that, you're in the "repayment period," during which your credit line starts to decrease regularly (1/240 per month) so that you pay off in 30 years.

6.  
   Can I Make Extra Lump-Sum Payments in Addition to my Payroll Deposit?

   Yes — and this will pay off your loan even faster. By moving funds from low—interest deposit accounts or poorly performing assets into your account, you'll reduce your principal instantly and save you even more interest, allowing you to pay off even sooner. Of course, you still have total access to the additional equity this creates.

7.  
   Should I Put All of my Available Cash into the Mortgage?

   That depends. You want some diversification, but if your cash is earning less than your loan's interest rate, it makes sense to move a portion of it into the account. Why "earn" 1% or less on your deposits when you can "save" 5% to 6% on your interest costs? In effect, you get the same advantage the banks now enjoy on your money. Remember, you have access to your available credit line if you need it.

8.  
   Should I Close my Old Checking Account?

   Keep your old checking account open. This allows you to quickly deposit checks and cash, then transfer the funds electronically into your All-in-One Loan. Flowing as much of your cash finances through your All-in-One Loan as possible maximizes your interest savings. The more funds you "park," the lower your daily principal balance, and the more interest you save.

9.  
   How and When Does my Payment Change?

   The interest due on your loan may change monthly, based on the one—month London Interbank Offered Rate Index (LIBOR) interest rate index published by the Wall Street Journal at the end of every month.

10.  
    What is the LIBOR Index Based on?

    The LIBOR is an average of the interest rates that major international banks charge each other to borrow U.S. dollars in the London money market. It is one of the most common indexes on which to base mortgages.

11.  
    What Happens When I Pay Off the Loan Early?

    If you pay off the loan early, you still have access to the accumulated equity, up to your credit line amount, until your 30—year term is complete. If you continue to make deposits into the account, and your loan is paid in full, those deposits can be transferred into a money market account online, and your account will still remain open.

12.  
    What Happens if my Home Loses Value?

    Just like any mortgage, you owe the amount you've borrowed, regardless of what happens to the value of your home. A problem some borrowers have faced recently, if their home has devalued greatly, is owing more on the house than it is worth. However, because the All-in-One loan allows you to pay down principal faster, you'll stand a better chance of avoiding being "underwater" on your loan, as compared to a traditional loan.

13.  
    Do I Have to Pay Off my Loan Early?

    No. You have a full 30 years to pay off your loan.

14.  
    How Do I Find Out How Fast my Loan Should Pay Off?

    To get an advance estimate of your payoff timing, interest costs and to evaluate different interest rate scenarios, visit our interactive simulator.

15.  
    What Happens if I Miss a Payment?

    The All-in-One Loan is ideal for people whose income can vary. During the first 10 years, you only owe interest, which is automatically added to your principal balance monthly, so there's really no "payment" to make as long as your principal balance stays below your credit line amount. The only payment you need to make is to stay below your credit line amount.

16.  
    How Do I Access the Equity in my Account for Expenses?

    The same way you access funds in your old bank account. You have online access to view your account balances and transactions, and you can access funds via checks, ATM/POS debit card (with six surcharge—free visits per month), EFT, ACH and online bill—pay.

17.  
    Do I Need to Change my Spending Habits?

    That's the great advantage with the All-in-One Loan. You don't have to change your standard of living. And because more of your income will be going toward principal, you'll likely come out ahead, even if your spending increases! However, if you can find ways to trim expenses, you can pay off your loan even earlier.

18.  
    Is There a Maximum Amount I Can Draw from the Account?

    You can draw all the way up to your credit line. The amount you have available to you at anytime is the difference between your principal balance and the line amount.

19.  
    Isn't Access to All that Equity a Little Risky?

    That's why the All-in-One Loan isn't for everyone. We only recommend it for people who show an excellent credit history and are financially sound. Our experience has shown that our clients are prudent, responsible borrowers who don't change their good financial habits just because they take out an All-in-One Loan.

20.  
    Can I Use the All-in-One Loan as a Platform to Make Other Outside Investments?

    Many sophisticated investors see the All-in-One Loan as an opportunity to "borrow" money from their available equity and "reinvest" it in an outside investment at a higher rate of return, netting the difference between the two. Remember, you are borrowing against your home equity to make outside investments and you should consult your financial advisor as to the risks associated with such investments.

21.  
    What Portion of the Interest is Tax-Deductible?

    According to IRS publication 936, interest paid on any mortgage loan used to purchase, construct or substantially improve a home is deductible to the extent that the "acquisition debt" does not exceed $1 million. Plus, if tax law requirements are met (and where state law allows), interest on home equity indebtedness of up to $100,000 may be deducted for income—tax purposes. This means that the interest on the amount of your initial draw (e.g., to purchase the property) and any substantial improvements would be completely deductible, plus up to $100,000 over that amount, regardless of how the latter proceeds are used. Consult your tax advisor for more guidance.

22.  
    Won't Paying Less Mortgage Interest Reduce my Tax Deduction?

    Yes, which is beneficial to you because you're eliminating your interest burden. Paying $3 in interest to get approximately $1 in tax deductions is not a good long—term strategy. Does it make sense to pay a higher interest rate so that you got a larger deduction? Of course not! Otherwise, you'd want the highest interest rate possible! Getting rid of your mortgage quickly is a much more prudent course. Also, while you're paying down your balance, the interest you do pay IS tax deductible.

23.  
    The Loan is Based on the LIBOR Index. What if Rates Go Up and Why is the Margin Slightly Higher than Other Loans?

    Here is where the All-in-One Loan is changing the way financing real estate is viewed. It's no longer just about the rate. It's about how many dollars of interest you pay on a lower principal balance. With the All-in-One Loan, your principal balance is continually whittled down by your direct deposits, which can offset the effect of higher rates because you're paying interest on a lower balance. This effect actually compounds as time goes on. The best way to observe this is to use the Interactive Simulator. You'll see why the slightly higher margin on this loan, which is required due to its highly transactional nature, can have such a minimal influence on the overall payoff timing.

24.  
    Why is There an Annual Fee?

    Most mortgages do not have the ability to do transactions, and traditional home equity lines of credit only let you write a low number of checks (often with a minimum draw). The All-in-One Loan is a line of credit that gives you full transactional capabilities, which is what the annual fee helps offset. Compared to the amount of interest you'll be able to save, it's a relatively small fee.