Why hasn't an all-in-one type loan product been offered to the public before?
There have been smaller institutions that have indeed launched similar type products, typically limited to only their customers. The mortgage products we use primarily today were actually developed during the Great Depression Era, lengthening the repayment terms for borrowers in an effort to making housing more affordable. Since then, there has been no substantial lobby for change and unfortunately, conventional products haven't kept up with consumer demands and behavioral changes. In time, we believe mainstream lending institutions will eventually evolve too.
How do lenders benefit by promoting a loan that saves borrowers interest?
Although the vast majority of mortgages purchased in the U.S. are for 30 year terms, most are paid off every 5-7 years, historically, either through a refinance or by sell of the property. So in actuality, lenders only earn income on those loans for a short period of time. But the All In One Loan is different. It provides a variety of benefits not offered with conventional financing and therefore, less incentive to be replaced. The result is reduced risk for a lender, the potential to earn interest income for a greater period of time and the opportunity to develop "stickier" relationships with borrowers.
Will Fairway sell the All In One Loan after it closes?
Yes. Fairway sells the All In One Loan note to an end investor or portfolio lender. Fairway will not retain servicing.
Who provides the banking features that come with the All In One Loan?
Regional deposit institutions have been partnered with, including community banks and credit unions, to provide servicing support for the All In One Loan. These institutions issue the secure access features, an online account, as well as all of the standard fraud preventive and protection services banking clients are accustomed to.
What are the credit terms of the All In One Loan?
How many years can a borrower draw from their All In One Loan line of credit?
Is there a balloon payment due?
How is a principal payment made?
How are monthly interest payments calculated?
Can a borrower make extra payments into their All In One Loan?
Should a borrower put all of their idle funds into the All In One Loan?
Why is the All In One Loan so effective at saving interest?
What is the value of All In One Loan fully indexed interest rate?
Aren't adjustable rate loans more expensive and risky than a fixed-rate mortgage?
What is the LIBOR index and how is it used?
What is the historical monthly average value for the 1-month LIBOR index?
Is there a direct relationship between the 1-month LIBOR index and rates here in the U.S.?
How fast does the 1-month LIBOR index rise or fall historically?
Are there limits to how much the All In One Loan interest rate can adjust?
What tools are available to measure borrower suitability and their ability to repay the loan?
What is the primary benefit of the All In One Loan?
Does saving mortgage interest negatively impact a borrower's taxes?
Are deposits into the All In One Loan protected?
Is every household suitable for All In One Financing?
Which countries host banks and lenders that have previously developed similar products?
What happens if a borrower spends up to their All In One Loan credit limit?
What happens if your borrower pays-off their All In One Loan?
Is there an annual fee?
How much does it cost to get the All In One Loan?
How much interest can a borrower deduct from their taxes with the All In One Loan?
To begin with, keep in mind that the All In One Loan is both a "primary" loan because it takes first lien position, as well as a home equity loan (HELOC). The standard rule is that a couple can deduct the interest paid on up to $100,000 in home equity loan debt and a single filer can deduct the interest on up to $50,000. So, if a couple has a $100,000 home equity loan and paid $7,000 in interest on it over the course of the year, they can take a $7,000 deduction on their joint tax return. In addition, the IRS allows couples filing jointly to deduct the interest on home loans for up to $1 million in home acquisition debt, and up to $500,000 for single filers. Most of the time, that's going to be the deduction for the primary loan used to purchase the home. However, the IRS defines home acquisition debt as debt used to "buy, build or improve" a home. So, if you take out a home equity loan and use it for home repairs or improvements, it's considered home acquisition debt and subject to the higher $1 million/$500,000 limits. So, if a single filer were to take out a $75,000 HELOC and use it to build an addition onto his home, he could deduct the home equity loan interest paid on the entire $75,000. But if he were to use it to buy a boat or pay for his daughter's college expenses, he could only deduct the interest paid on the first $50,000 of the amount. The rules treat home acquisition and home equity debt separately, so a couple can deduct the interest paid on up to $1 million in home acquisition debt plus another $100,000 in home equity debt, for a maximum of $1.1 million combined. For single filers, the maximum would be $550,000.
Frequently Asked Questions