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Asset Manager HELOC

The Asset Manager HELOC is a new product from one of our newest lenders and I am very excited (yes, I can get excited over a new mortgage) over the potential to manage mortgage debt the asset manager HELOC will give my clients. The Asset Manager HELOC, available for purchase or refinance is a Home Equity Line of Credit available up to 90% of value, (80% on an investment property) instead of a traditional mortgage. Unlike the traditional HELOC, which is designed to work in addition to a traditional mortgage, the Asset Manager HELOC replaces your mortgage. Email me with questions on the Asset Manager HELOC

Lets think about this for a second. The traditional 30 year fixed rate mortgage was designed for a time when most people lived in one house for their entire lives. Today, the average homeowner moves every 5 years or less. The Asset Manager HELOC is another in a growing suite of tools which will give you the flexibility to really manage your finances.

The Asset Manager HELOC is set up as a 30 year mortgage with a 10 year interest only period with variable rates tied to the Prime Rate. After the initial 10 year period, any remaining balance is amortized over the remaining 20 years. Mortgage Insurance is not required for the Asset Manager HELOC and no escrow accounts for taxes and insurance are required. As I see it, the Asset Manager HELOC gives you three options to manage your mortgage debt.

Option One
Improve Your Cash Flow With Low Monthly Payments
Your payments can be reduced through interest only payments (for the first ten years), no mortgage insurance premiums, no escrow account payments or reserves. Lets look at a real world example.

                            Standard Loan                                                                        Asset Manager HELOC
Loan Amount:     $270,000                                                                                $270,000
Interest Rate:        6.500%                                                                                   4.75% HELOC
Required Interest: $1,462.50                                                                              $956.25
Required Principal $244.08                                                                                $0
Required Escrows $250                                                                                      $0
Mortgage Insurance $146.25                                                                              $0

Total Monthly Payment $2,102.83                                                                       $956.25

$1,146.58 less required per month with the Asset Manager!

Option Two
Save on Interest Charges by Paying Off Your Mortgage Early
If you are comfortable with making the larger payment associated with a traditional loan, the Asset Manager greatly accelerates your pay off. In the illustration above, if you made the $2,100 payment the loan would be paid off in just over 12 years saving you almost $163,000 in interest charges! 

Option Three
Make Flexible Payments as Circumstances Change
You retain control, pay extra in the months you have the funds available, as in the illustration above, or drop back to the interest only payment when necessary. Also, and this is the really creative part, as you make those extra payments, because this is a true line of credit, those funds are always available to you. If you find an investment opportunity, or have extra expenses in a given month, write a check up to your original loan balance. If your transaction is a refinance, you may want to consider setting up your loan for the max amount as the additional funds do not cost you a dime until you use them. 

Here is another really interesting way to use the Asset Manager HELOC. Lets take our illustration above with a $270,000 balance at the end of the month. We know that our interest only payment is $956.25. Because the Asset Manager HELOC is an account and has a free check writing feature, we could deposit our paycheck into the account and pay our monthly expenses from there rather than a traditional checking account. If our monthly income of $5,000 is deposited in the account and we had $3,000 in expenses that month including our mortgage payment, we would have reduced our mortgage balance to $268,000. Since our payment is based on the balance on the last day of the month, our new payment is now $949.17. In this illustration, if we look at where we are in 5 years the results are stunning. Using the Asset Manager in this fashion, our mortgage balance is $ 213,600. If we had chosen the traditional mortgage, our balance will be $ 251,200. A difference of $ 37,600! Your numbers may be different depending on your specific situation. Please give me a call and I will be happy to run a comparison based on your specific situation. 

The product is available as a fully documented or Stated Income loan for borrowers with excellent credit and credit scores above 660. It is available for Owner Occupied, Non Owner Occupied, and Second Homes to a max 90% LTV (80% LTV for investment property).

Because this is a relatively new and somewhat more complex product than a traditional mortgage, I am not including the normal link to my prequalification section and I really would encourage you to call or email me with your specific situation so we can determine together if this is the right loan for you. 

If you are interested in how the Prime Rate has performed as an index, I have a chart available tracking the last 10 years by month. I also have charts tracking fixed rate averages going back to 1971.

I have extensive information available on home equity loans and a home equity line of credit as well

I have just put together a Power Point presentation that is available in .pdf format on the details of the product. If you would like a copy, please feel free to request it by email. I am sure it will be useful to you.

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

Read my new lock or float daily blog to see where rates are going

New! View my Wealthbuilder presentation and learn the safe way to manage your home equity and fund your retirement.

I offer an analysis of your situation today and can make suggestions on how small changes in how your mortgage is structured can have a life changing effect in the years to come.  Read more

I hope this information was useful to you. Please scroll down to view my Mortgage Market Guide. A weekly publication explaining the financial markets from a consumer's perspective that is available by email. I have nearly 8,000 subscribers and would be happy to have you as well. Your email address will never be used for any other purpose.

 

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