Are you looking to purchase your own home, but you are apprehensive about depleting your savings in order to do so? An all-in-one mortgage, (sometimes called an offset mortgage), could be something to consider when you are attempting to decide what type of mortgage you want to apply for. All-in-one mortgages allow a borrower to combine a mortgage with a savings account. If you are trying to decide if an all-in-one mortgage will best suit your needs when buying a home in the regions of Hawaii, Florida, California, Washington, Illinois, or Ohio, contact Dan Turner with Geneva Financial. We can help you determine what type of mortgage will work the best for your situation so you can purchase a new home.

How an Offset (All-In-One) Mortgage Works

An all-in-one mortgage, (or offset mortgage), consolidates a savings and checking account, a mortgage, and a home equity line of credit. This combination allows a homeowner to pay down more interest initially, while permitting them access to the equity that is accumulated from the property. It is important to note that in the United States, the official name for this type of loan is all-in-one, and in the United Kingdom and Australia, it is called an offset loan. This is due to the fact that the  IRS does not allow taxable interest paid and received to cancel each other out, as is the case in Australia the United Kingdom.

In an all-in-one mortgage, the payments are applied towards the principal and interest portion of the loan by being deposited into a savings account in which money can be withdrawn from. The homeowner can use the equity from the offset mortgage however they choose. For example, they can use the money to pay bills, buy groceries, or pay for home or medical expenses, etc. The account itself is tied to your home mortgage, so all the surplus money goes towards that loan. Essentially, you can pay off the loan balance more quickly, and save money on interest, as long as you are spending less money than you’re earning and allow the excess amount to go to the mortgage.

What Are the Benefits and Qualifications of an All-In-One Mortgage?

The benefits of an all-in-one mortgage include:

• You can use extra cash flow to pay off your mortgage quickly
• The homeowner will receive a higher return on their deposits because the bank account is directly built into the mortgage
• Extra principal payments can be be obtained at any time, the loans are reversible
• All-in-one loans offer instant liquidity, if the homeowner is unable to make a monthly payment, the minimum interest due is advanced from the account’s credit line

The qualifications of an all-in-one mortgage typically include:

• You must have a FICO score of 700 or higher
• You must have a steady cash flow
• Most lenders charge a $50-$100 annual fee in addition to other common loan expenses
• Most loans are 30-year adjustable rate mortgages

Closing Cost Assistance

If you are financially disciplined and looking to purchase a home in Hawaii, Florida, California, Washington, Illinois, or Ohio, an all-in-one mortgage may be a great loan option for you. As long as you spend less money than you earn, and allow the excess money to go towards your mortgage, you will end up saving money on interest. Contact Dan Turner at Geneva Financial today for your loan questions, our team will help determine the right loan for you.