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.

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Finance: What is a second mortgage?4 Views

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Finance allah shmoop What is a second mortgage Okay you

00:07

know what a first mortgages it's otherwise cleverly named what

00:12

is called it is called oh yeah Mortgage it's Just

00:14

a loan on a house You paid four hundred grand

00:17

for this baby Hundred grand down two hundred fifty grand

00:19

in a first mortgage And they're still fifty grand You

00:23

owe well where's that fifty large coming from the bank

00:27

wouldn't loan you any more on a first mortgage that

00:30

was costing you six percent a year Tio you know

00:32

to rent that money So you had to get a

00:34

second mortgage which should things go awry and you become

00:40

a statistic Well that's it's fully behind the first mortgage

00:44

in the priority stack of payback So in a bankruptcy

00:48

situation the first mortgage first what's called a first mortgage

00:52

get it fully paid along with any fees associated with

00:55

it and back interest accrued and any other things that

00:59

are associated with that first mortgage it stands in line

01:02

first in priority Then any cash leftover gets attributed to

01:07

that second mortgage So not surprisingly second mortgage money costs

01:13

a lot more to rent then first mortgage money because

01:16

the risk of non payment in a bad situation is

01:20

meaningful E higher especially when the borrowed does this for 00:01:25.136 --> [endTime] a living

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