It is a popular commercial and advertisement that you probably have seen a ton of times about Refinancing your Mortgage Payment by 1%. The One Percent Mortgage Refinance loan is possible when the 1% payment is lower than the loan interest owed. 1% home loans, which is available and able to be customized to your needs with some rate options starting at 0% for a few months before an increase to up to 4%. These refinance options have the potential to create very manageable loan payments.
40% of all home mortgages approved 2005-2006 came from households that elected to refinance their mortgage into the 1% payment structure. Proponents of the One Percent Mortgage refi option really believe in its effectiveness in helping homeowners continue to afford to stay in their home and make payments affordability. Proponents of this loan option see this financial product as a new choice for homeowners on price and flexibility. This flexibility and affordability is great news for families all over the United States. Critics of the One Percent Mortgage financial tool think that it is too complicated for the average home owner to understand and as a result will financially hurt themselves when they misuse or misunderstand this option. One thing that is for sure when it comes to the risks of this financial strategy, individuals are willing to take the risk to stay in their home and build wealth for their family. Again, United States homeownership is at a historic level. Many United States homeowners are first generation homeowners, and have just obtained the financial means to do so. Homeownership is an impressive achievement, and many individuals who are in their 20s and 30s have become homeowners flexibility in payments that the One Percent Mortgage refinance gives the borrower.
Now, let’s look at the numbers. How does the traditional 30 year mortgage stack up to the 1% mortgage option?
For a $750,000 Mortgage:
1% Minimum Payment: $1,800
Normal Loan Payment: $4,500
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Cash Flow/ Savings: $2,700
It makes sense why the One Percent Mortgage refi is advertised as a low cost alternative to the traditional 30 year mortgage. In the aforementioned illustration the one percent mortgage monthly payment is sixty percent less than the monthly payment from the traditional mortgage. 1% home mortgage minimum payments are typically 50% cheaper than even the adjusted rate mortgages with interest only payments. The great news about 1% mortgages is that the borrower has the option to pay more than the minimum monthly payment with no penalty.
What to expect with a 1% Mortgage
There is more to a One Percent Mortgage than its lower interest rate. These mortgage options also have the 1% start rate. They have actually a totally indexed rate also, which is the real amount of interest due every month. The monthly 1% home loan minimum payment does not cover all of the interest due. Critics of the one percent mortgage think that a minimum payment that does not cover all of the interest owed is a mistake. However the proponents of the 1%, the borrower is not paying all of the interest due, which is seen by some as a good thing and some as a bad thing. Let’s take a look at some of the commonly viewed advantages and cautions of 1% home loans:.
The Upside of the One Percent Mortgage:.
1. Lower Monthly Payment Options: In the aforementioned illustration the 1% minimum payment is 60% less than the traditional interest with principal mortgage payment.
2. Flexible Money Options: 1% Mortgage refi options do not require a principal payment monthly. This mortgage instrument gives the borrower flexibility so that they can make better financial decisions for themselves so that they can make balloon payments if they have the additional cash, but places their monthly required payment much lower. This is a great option for families who are early in their careers.
3. Equity and Cash Flow Flexibility: With a One Percent Mortgage minimum payment, that $2700 difference in payments is money in the borrower’s pocket, to invest or spend at their discretion. By postponing interest using a One Percent Mortgage, the customer has complete access to cash that generally would be locked up till they sold the property. That $1800 per month adds up to over $100,000.00 in money over 5 years on a One Percent Mortgage, and it’s offered every time your paycheck does not get utilized up paying a big traditional mortgage payment each month.
4. Optimize Debt Consolidation: Using a One Percent Mortgage re-finance to pay off all of your other lenders, such as charge card companies and high interest rate lending institutions, suggests that you can save a lot more cash than with a 1% home mortgage re-finance alone. Because you aren’t throwing high interest cash at your lenders every month, the money which you save by making the 1% home mortgage payment in fact enters into your pocket, your cost savings, your financial investments, or any place you need it most. That’s supreme control. Let’s state that in our $500,000 1% home mortgage example above, we rolled in $30,000 of charge card and other high interest debt that have a monthly minimum payment requirement of $1,000. By using a 1% home mortgage refinance to pay off those debts, total month-to-month savings utilizing the earlier example would be over $2800 monthly, $1000 from the financial obligation consolidation plus $1800 from the difference in between the standard loan payment at 6% and the 1% home mortgage minimum payment.
Turn Equity into a Tax Deduction: First, the One Percent Mortgage payment is 100% interest and therefore should be 100% tax deductible. One of the most attractive benefits of One Percent Mortgages is the extra tax deduction offered on deferred interest.
1% home loans, which now come in dozens of ranges with start rates from below 1% (some even start with a zero percent interest rate after a refi) up to four percent or more, use amazingly low payments. 1% home mortgage minimum payments are generally 50% lower than even the extremely lauded Interest Only payment mortgages, and most loans in the 1% home loan family consist of the ability to pay more than simply 1% if requirement be.
Make The Most Of Consolidating your Debt: Focus on using the money from a refinanced mortgage at 1% to eliminate all high interest unsecured debt. This includes credit cards, high interest loan providers, and more. When you get a One Percent Mortgage refinance and use this strategy to pay off those big debts you are able to save more of your personal capital. By utilizing a 1% home loan re-finance to pay off those debts, overall month-to-month cost savings using the earlier example would be over $2800 per month, $1000 from the debt consolidation plus $1800 from the difference between the conventional loan payment at 6% and the 1% home loan minimum payment.
Turn Equity into a Tax Deduction: First, the One Percent Mortgage payment is 100% interest and therefore ought to be 100% tax deductible. If you have questions or require assistance making a decision about your current home, please contact us today.