Australia, Canada, and Europe have enjoyed 0% mortgage loans for 20 years. This type of home loan, called Off Set Mortgage or All-In-One Loan, has finally made its way into the United States. Essentially, it works by allowing the money in your savings or checking account to offset the principal balance on your home mortgage by running funds through your equity line of credit.
Let’s say you owe $200,000 on your home loan, but by depositing $200,000 of liquid assets directly into your equity loan, your mortgage balance reads zero. In other words, the bank will assess interest on your mortgage minus what’s in your account. These funds can come from direct deposit paychecks, checking and savings account deposits, and low-interest investments, such as CDs. The amazing feature is you’re paying down your principal balance first – just by having money in your account. You can still freely use your money, withdraw and spend at will, but while it’s just sitting there, it can help decrease your mortgage balance. Then, when the banks assess interest at the end of the month based on the daily average, the interest paid turns out to be much less than the conventional loans with which Americans are more familiar. Discuss your options with a qualified loan officer to learn more about this new loan to see if it may be right for you.
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