Purchasing a home is one of the most exciting and reassuring things anyone can do in their lifetime. It shows that you have worked hard and your dedication and effort were not done in vain. However, trying to decide which mortgage is right for you can be challenging. If you haven’t heard of an all-in-one mortgage, you might be missing out on a great opportunity.
An all-in-one mortgage is an excellent option that allows a homeowner to pay down the interest of their loan faster while also being allowed access to the equity that is building on their home. All-in-one mortgages are not for everyone, though, and tend to only be available to those with exceptional credit.
If you are interested in finding out more about an all-in-one mortgage, you have come to the right place. We will be discussing what an all-in-one mortgage is, how it works, and why you should consider it.
What is an All-In-One Mortgage?
An all-in-one mortgage is probably one of the most convenient mortgages a homeowner can consider. It simply refers to a mortgage in which the homeowner can pay down the interest of their loan while still having access to the equity. This allows the homeowner to pay off their loan quicker without having any impact on the equity of the property.
Essentially, working with an all-in-one mortgage is similar to combining elements found in a checking and savings account. The mortgage works with the home equity line of credit, also referred to as the HELOC. Together, this allows the homeowner to pay off their loan quickly and efficiently without needing to refinance.
Who Should Consider an All-In-One Mortgage?
Now, an all-in-one mortgage is not for everyone. Although it sounds promising, some lenders will not be able to work with you if you do not have some of the must-have pre-qualifications. There are essentially two types of homeowners that are best suited for an all-in-one mortgage and are likely to be considered:
- Those with a good credit history and high credit score. If you have exceptional credit history and currently have a high credit score you may be eligible for an all-in-one mortgage. It shows that the lender can trust you to make payments on time. By doing so, the homeowner is able to maximize their income, pay off the debt, and also tap into their home equity with no problem.
- Homeowners who want to pay off their home quickly. Anyone who wants to get serious about paying off their home as quickly as possible should consider an all-in-one mortgage. With this type of mortgage, you can pay off your debt faster while also building equity. In turn, this will free up disposable income for a more relaxed and confident lifestyle.
Advantages of an All-In-One Mortgage
There are a slew of advantages that come with an all-in-one mortgage. Here are a few of the top reasons why every homeowner should consider getting one:
- You will be able to make additional home purchases, if wanted. Some people are on a mission to buy a home for themselves as well as an additional home for profit or leisure. Whichever of the two, you will have an easier time financing a new home purchase when working with an all-in-one mortgage.
- Direct deposits are automatically applied to the principal. This is essentially saying that your outstanding daily balance will be lowered immediately. This will also reflect on the interest. Since interest rates can be high, especially in certain areas throughout the country, getting rid of debt will essentially lower the amount of interest you pay.
- Less money on interest results in more money available for other needs. It is highly recommended to always pay off debt sooner to avoid paying unwanted interest fees. When your interest fees are lowered, it offers up more flexibility for your money.
- You don’t need to refinance. To lower a payment, most of the time refinancing will need to be conducted. This can, at times, be a very lengthy and frustrating thing to do. With an all-in-one mortgage, there is no need for refinancing. You will still have access to your home’s equity and enjoy less interest simultaneously.
As you can see, an all-in-one mortgage is an excellent choice for almost any homeowner who is secure in their finances. It is certainly not the ideal option for someone who does not have recurring income or if their income changes month-to-month. It’s also not recommended for those with incredible interest rates on their mortgage, as you won’t be doing yourself too much of a favor since the interest is so low as it is.
Things to Consider With an All-In-One Mortgage
The biggest thing to consider when thinking about getting into an all-in-one mortgage is that this is essentially an accelerated loan. Any money that is leftover from your account will automatically be sent to your mortgage. This can be a good thing or a bad thing, depending on your income.
You need to make sure you are going to be able to keep up with the extra payments. The good news is, most loans will allow you to take money out after you have given it to the mortgage. For example - if you suddenly need a new pair of tires on your car, you can take the money out from your “accelerated” mortgage to pay for the tires. You shouldn’t make it a habit, though.
Keep in mind that not all accelerated mortgages are going to offer that freedom with the payments, too. Some companies will require you to pay a certain amount before being able to take out money when you need it.
It’s all about being smart with your money. If you are going to indulge in an all-in-one mortgage, then you need to be aware of your financial freedom and limitations. Sometimes, an accelerated mortgage is not the best solution for your family. This is especially true for those who already have an incredible interest rate on their mortgage, in which case they would never be eligible for refinancing anyways.