Simple Interest Mortgage Advantage

FinanceMortgage & Debt

  • Author Clinton Sistrunk
  • Published March 1, 2023
  • Word count 520

There is a little-known mortgage product that exists in the marketplace today, we call “The Simple Interest Mortgage”. Our most financially savoy borrowers today utilize this product to grow and safeguard their wealth. In fact, The Colorado Mortgage Team’s Mortgage Engineer Clinton Sistrunk, has his current property financed with it. With a traditional amortized loan, you have no access to the equity in your home, without refinancing or taking out a 2nd mortgage. When you pay extra on your home you do not save any interest unless, you term out the loan paying it off in full. That is because the interest is front loaded and every payment is set in stone upfront with how much goes towards interest and principal. Making payments early also does not save you any interest.

With a simple interest mortgage, you turn all these aspects upside down. Interest is calculated daily so if you make a payment early you save interest in real time. Paying extra also saves you interest immediately. It is also combined with a checking account so your equity is always liquid instead of being locked into your homes vault just like with a HELOC. This allows you to put idle money sitting in lower return vehicles like savings and checking accounts to work for you into your home. This also helps you pay it off quicker and reduces the total interest you pay. Interest is calculated daily and then added to the principal balance at months end. Plus, there is no escrow account so you can also keep that money in the home helping to keep down the loan balance, saving interest until taxes and insurance come due each year. The payment which they add to the principal balance each month is interest only.

This loan can act as a form of insurance during economic slowdowns. It does not require a payment in any given month as long as you have the equity in your property to cover the interest only payments each month. If things got really tight you could choose not to make a payment for months. You would never default or have a late payment. It acts as an emergency fund or source of capital for future needs like college, medical or taxes and wants like trips or vehicles. This is a 30-year loan so you never need to qualify again to access your equity. Even better, it becomes a retirement planning tool, as a possible reverse mortgage replacement option that you control and is extremely flexible. No need to ever refinance to capture a lower rate because it is a variable rate loan, so as rates go down so does the interest rate on this product.

Want to learn more about this product? Sign up for a 1 on 1 simulator presentation with a mortgage specialist in this product. They will showcase the true power of this product for you. This ensures you have a firm understanding of the benefits and risks associated with this loan so you can make an informed decision and decide if it is right for your family.

Your Mortgage Superhero,

Clinton Sistrunk

Clinton Sistrunk is a Mortgage Broker with over 25 years of experience. He founded The Colorado Mortgage Team in 2012 with the mission to empower individuals with the information they need to thrive financially through real estate.

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