All-In-One Mortgage
The Swiss Army knife of financial operations, an all-in-one mortgage puts together aspects of three popular financial products: a mortgage, a home equity loan and a bank account. The all-in-one provides the liquidity of a bank account (meaning the customer can always get at their money), while allowing them to pay down their mortgage as fast as possible.
Basically, when you deposit money into the all-in-one, those dollars go to pay down the mortgage. However, if you need to take money out (you can still use things like ATMs and automatic bill pay) that money is returned to you in the form of a home equity loan.
The background machinations are a little complicated, but from the customer's point of view, the money in your bank account (which usually earns a fraction of a percentage point of interest) can now be used to pay down the mortgage, potentially shortening the period of the loan and lowering the overall amount that will have to be spent over the life of the mortgage. But, unlike a traditional mortgage (where the bank keeps any prepayment), you still have access to the money put into the all-in-one.
For this privilege, the bank usually gets an annual fee on top of the normal interest payments. Also, the interest rate typically tops that of a traditional mortgage.
Related or Semi-related Video
Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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