What’s the best mortgage in 2024?
It’s 2022. What’s the best mortgage available today?
Unless you can find a 30 year fixed loan with a 0.25% interest rate, you’re probably going to want to explore an All in One loan.
Because of the way it accelerates your loan payoff, it saves you a fortune in interest compared to a 15 or 30 year fixed loan.
Most people only consider interest rates when looking for loans; what they forget is just as important though: loan term. How long are you paying that interest rate—and, equally important: what amount is it multiplying by. The All in One loan shortens that term and lessens that balance so aggressively that even if your interest rate did climb up into the 6’s, 7’s, 8’s, or 9’s you’re likely still much better off than you would be in a 3.5% fixed for 30 years.
“Is an All in One Mortgage really a good idea with the variable rate?”
In the AIO, I’m simply not worried about what my interest rate is doing.
That’s not what I’m gambling on. I’m actually not gambling at all anymore—I’m banking on my income-to-expense ratio being such that no matter what my interest rate does, I’m going to win by a landslide.
When you consider how the AIO also provides you instant access to your home’s equity (without needing to refinance), the All in One Loan stands secure as the best mortgage in America.
It saves you a fortune in interest.
It saves you years—even decades—of mortgage payments.
It accelerates your equity.
And it replaces any need for an emergency fund by liquidating that equity, eliminating the pressure that comes from any lean seasons ahead.
It’s not magic; it’s just math. See it for yourself at our All in One interactive simulator.
What if I don’t have any money saved for a down-payment?
How does Down Payment Assistance work?
Many clients have sufficient income to qualify for a great new home, but they don’t have any money saved up for a down-payment. While the AIO might not be a viable option, we also offer down-payment assistance (DPA) programs that can help mitigate that particular challenge. Feel free to setup an appointment to learn more about how these work, but the basics are as follows.
You can get an interest-free 2nd loan for 4% of the purchase price of your home—3% to go towards down payment, and 1% to help cover closing costs. This is a 2nd mortgage that you don’t ever make payments on, nor pay interest on. You only repay this loan when you sell the house or refinance the mortgage.
Say you’re looking at purchasing a $400,000 home: You could borrow $16,000 in down-payment assistance to go towards your cash-to-close. So, assume closing costs are around $7,000, if you were wanting to put 3% down ($12,000) and the closing costs were $7,000, you’d need $19,000 cash-to-close. Using down-payment assistance would cover $16,000 of that, meaning you’d only need to bring $3,000 cash-to-close.
Sounds too good to be true right?
Well, it comes with two catches.
1) On any DPA loans, you have to pay 1% origination. On most other loans, we never charge origination. But on DPA, we are required to. So, back to the example above, you’d have to pay $4,000 origination (ie, 1% of $400,000) at closing. So that $3,000 you needed for cash-to-close actually becomes $7,000! It’s interest free, but you pay an up-front premium to get access to it.
2) You also have to take a first-time homebuyer course online (cost is $100), and pass an interview to prove you passed the course.
Bottom line: If down-payment is the only thing keeping you from buying a house, paying that 1% origination is worth it. The house will likely appreciate 1% within the first few months, so it will be worthwhile in the long-term. But if there’s any way to save 3%-5% to put down without using DPA, that’s preferable.