All in One / Vortex Loans

8 Replies

Hi!  Has anyone had experience using all in one loans / vortex loans?  it sounds good but I'm not sure if it's the right way to go.  Basically it's a faster way to pay down your loan because it applies your payments to principal first and not interest...  but if it's a really good product, I'm wondering how come not a lot of people use this kind of loan...

This loan is known as many different names. Our company rolled it out in the summer, but pulled it back due to compliance issues with the disclosures with the investor. We plan to roll it out as soon as the compliance issues have been resolved (soon). I can tell you, that the loan is not for everyone, however it is a great loan for many. 

Its a 1st mortgage line of credit that you can draw on for a full 30 years compared to a standard HELOC with a max. 10 year draw period. The loan is intended to take the place of your existing checking and savings account. To make this loan work the best for you, you want to deposit all your monthly money into the HELOC account and if all goes as it should, you keep more in the account than what the minimum interest only payment is. By doing this, you will increase the amount of available credit to draw on and also pay down your mortgage faster.

The way that interest is charged is on a daily basis, so if you have a large deposit at certain times in the month, and there is lag time before you have paid all your bills out of the account for the month, that means your charged less overall interest at the end of the month, and therefore your balance comes down quicker. This can be a huge advantage to those that save a good amount of money each month. Also, you can always draw on the account up to your maximum limit, so its not as if your money is permanently tied up?

This loan can be compared to a fixed rate loan (your existing mortgage) side by side and can show you that regardless of the higher and adjustable rate, it will out perform a fixed rate as far as bringing the balance down quicker and also giving you more and more access to the equity. A standard 1st mortgage you can't get to any of your equity without refinancing, this one you can. 

The reason no one knows about it, is that its only offered by limited companies. The loan has been around for years, but most companies are not aware of it or they don't want to take it on and have it compete with their normal HELOC's.

This loan is also great for investors. You can do up to 70% CLTV on this product and you can have up to 10 HELOCS of this type out at any one time. Go find that feature anywhere.......you wont, because its not out there.

If there is any one drawback with this loan, it is that the loan requires the borrower to have 10% of the line amount as reserves. So if your have a $250,000.00 HELOC, then you must have $25,000.00 liquid in reserves at the time of closing. Other than that drawback, its a great loan and an incredible tool if used correctly!!!

@Kevin Romines I've been looking at this loan (and HELOC strategy) to pay off our primary faster. I see the math and it makes sense. However, I'm concerned about the variability of the HELOC and my ability to keep the payment lower should rates rise quickly, and what keeps the bank from freezing my credit line? With my second HELOC, the bank could technically freeze that credit line. How does this differ? Should I go this route, my intention would be to strategically paydown my primary and some of my lower-cost rentals to accelerate the cashflow and arbitrage the monies elsewhere.

I'd appreciate your feedback.  Thanks!

    Originally posted by @Kevin Romines :

    This loan is known as many different names. Our company rolled it out in the summer, but pulled it back due to compliance issues with the disclosures with the investor. We plan to roll it out as soon as the compliance issues have been resolved (soon). I can tell you, that the loan is not for everyone, however it is a great loan for many. 

    Its a 1st mortgage line of credit that you can draw on for a full 30 years compared to a standard HELOC with a max. 10 year draw period. The loan is intended to take the place of your existing checking and savings account. To make this loan work the best for you, you want to deposit all your monthly money into the HELOC account and if all goes as it should, you keep more in the account than what the minimum interest only payment is. By doing this, you will increase the amount of available credit to draw on and also pay down your mortgage faster.

    The way that interest is charged is on a daily basis, so if you have a large deposit at certain times in the month, and there is lag time before you have paid all your bills out of the account for the month, that means your charged less overall interest at the end of the month, and therefore your balance comes down quicker. This can be a huge advantage to those that save a good amount of money each month. Also, you can always draw on the account up to your maximum limit, so its not as if your money is permanently tied up?

    This loan can be compared to a fixed rate loan (your existing mortgage) side by side and can show you that regardless of the higher and adjustable rate, it will out perform a fixed rate as far as bringing the balance down quicker and also giving you more and more access to the equity. A standard 1st mortgage you can't get to any of your equity without refinancing, this one you can. 

    The reason no one knows about it, is that its only offered by limited companies. The loan has been around for years, but most companies are not aware of it or they don't want to take it on and have it compete with their normal HELOC's.

    This loan is also great for investors. You can do up to 70% CLTV on this product and you can have up to 10 HELOCS of this type out at any one time. Go find that feature anywhere.......you wont, because its not out there.

    If there is any one drawback with this loan, it is that the loan requires the borrower to have 10% of the line amount as reserves. So if your have a $250,000.00 HELOC, then you must have $25,000.00 liquid in reserves at the time of closing. Other than that drawback, its a great loan and an incredible tool if used correctly!!!

     Hi Kevin!

    Thanks for the feedback.  And @whitney hutten you got great questions on this! 

    I talked to someone from All In One company. He walked me through comparing my numbers on the site aioloan.net I'm the middle of a refinance right now and about to get 3.9% interest on my primary home which still has a balance of 680K. After walking me through the site, we realized that the best way to take advantage of this kind of loan is if I have at least about 15 - 20% of funds left from my monthly paycheck, just sitting on my account after all the bills have been paid. Currently, we have about 10% left over and with that, it will only speed up our loan pay down by a year. Instead of 30 years to pay, we'd be able to pay it off in 29. So that's not worth it for us. But calculating it at 15% extra funds per month, we'd be able to pay it off in 22 years. I honestly think this is an amazing loan. But again, you have to do your numbers to make sure it's right for you. I'd probably have to revisit this in the next year or two once we have a bit more of cash reserves and hopefully, we can take advantage of this amazing loan. I really love that you have a HELOC that is easily accessible. :)

    @Whitney Hutten Your concerns are valid but mitigated by the ability of this loan to potentially pay down so much faster than a normal fixed rate loan if used correctly. As Kat has mentioned, I would go onto the site and use the side by side calculators so you can see at what point this loan will out perform your existing fixed rate mortgage? 

    The thought of the lender freezing your credit line has only played out in a large scale one time in our recent history. The great meltdown of late 2007 / 2008. The world was melting down then, and as was prudent, all credit lines were frozen due to the global meltdown. Can that happen again, sure, but what is the likelihood of it considering the reforms that were put into place? Fairly unlikely. 

    There is risk any any kind of loan, even fixed rate loans. Look at the features of this loan, and if they are a better fit you than a fixed rate loan, then after doing your due diligence, go forward. Again, the loan isn't for everyone, but a large percentage of borrowers can benefit from this type of loan. 

    Hi @Kevin Romines , thank you for your comprehensive description of the AIO loan. I may be a good candidate because I have more> 10% of the line amount as reserves and >20% of funds left from my monthly paycheck. However, I usually invest my saving in the stock market rather than letting then sit on a checking account and I am concerned about the opportunity cost of paying down my mortgage earlier. Also, my understanding is that the minimum starting rate with an AIO loan is 3.75%, which is higher than what I was recently qualified for with BofA (jumbo loan, 30 years fixed rate, 3.35% on a 1.25M purchase 72% LTV, $13000 closing costs). Any thoughts on that? And on the BofA deal?

    @Kevin Romines   You nailed it! It is an awesome loan product, I can't recommend it enough for anyone who qualifies! 
    My wife and I got on it, and I liked it so much that I left my job in Medical Sales to join a company that specializes in them!

    @Lucia Aronica If you're a good candidate, the interest rate really doesn't matter. That seems so taboo to say, but our average client pays off in less than 5 years. When the payoff timeline is so condensed, it's not a interest rate sensitive loan. It's really the Interest cost we want to look at. If it's still a need, let me know if you'd like to take a closer look. I can show you the math that drives the savings.