Well, hello “Get Rich Education” nation. It’s
Keith Weinhold here. I’m in Portland, Oregon at the offices of Ridge Lending
Group, the company that’s created more financial freedom for real estate
investors than any other mortgage lender in the entire nation, and I’m with
president Caeli Ridge. Caeli: Hi, Keith.
Keith: Caeli, you know, you have offered an all-in-one loan product for real estate investors.
People can also use it on their primary residence, and it operates much like a home equity line of
credit. Tell us about the all-in-one loan. Caeli: It is exactly a home equity line of
credit or a HELOC, more commonly found. This is a very unique product that I’m
very excited to be offering to investors. It’s brand new to the marketplace. This
is a 30-year line of credit that you may attach to your investment property.
It’s been available for the primary for some time, but this is the first time, as far
as I know, that investors can take advantage of this first-lien HELOC.
The unique thing about this, it’s twofold, as far as I’m concerned, for the appropriate
borrower or investor, it saves a tremendous amount in interest paid if we
look at this in comparison to a 30-year closed-ended mortgage versus
this 30-year open-ended line of credit… Keith: And the 30-year closed-ended mortgage,
that’s just what you probably have, a 30-year fixed amortizing loan.
Caeli: Exactly, right, so in comparing the two side-by-side, the interest accrual that
comes in that fully amortized 30-year fixed loan is almost always double,
sometimes more than what the principal amount borrowed initially. With the first
lien HELOC you have total autonomy, total flexibility, and for the again the right
consumer, the right borrower that has some discretionary income typically 10%
of the total amount of income that you have every month left in against the
line, the interest accrual or the compounding effect of that is greatly
reduced saving a huge amount of interest over time, but for me although that’s
fantastic, it’s secondary to the flexibility that this affords. I’m so excited about that piece. You become your own bank effectively. Keith: So, with the
conventional 30-year fixed amortizing loan like you probably have, once you pay
down principal if you want to get that money back, well it’s like you’re trying
to go against a one-way street, because once you pay down principal if you try
to get the money back out again and use it, now you have to prove that you
qualify again, now you might have to pay fees, and it just is not nearly as flexible as what this HELOC is like where you can
draw it down and bring it back and draw against it and so on. Tell us a bit more
about the risk associated with this all-in-one loan that operates like a first lien HELOC.
Caeli: You know, I think that the risk is really going to be specific
to the individual and their discretionary income. For those
individuals that, let’s say, make $5,000 a month, and at the end of the month, day 30,
maybe they’ve got $50.00 left over this is not the product for them. that
Keith: Yeah. Caeli: That discretionary income, generally speaking, at about 10% is what makes this work, so
if there’s a risk I think that it is discipline, probably for the individual,
you guys know how your spending habits are, what those look like, but that would
be the only risk as far as I can see that would attach to this
particular loan product. Keith: Because a conventional loan is what we might say
front-loaded with most of your payments going to interest rather than principal,
a HELOC or this all-in-one loan is structured differently such that even if
you pay a higher interest rate with the all-in-one loan than you do with your
conventional one, you might actually be paying less in interest with the way
that is structured, and you actually have a tool, a simulator tool, where you can
compare your current loan terms with the all-in-one, and just how that would look
so you can see what your interest savings would be. Tell us about that simulator.
Caeli: It’s so great, an interactive simulator can be found on our website RidgeLendingGroup.com This will allow you to input very quickly, there’s just a few
forms to fill in, and the results will show you exactly how much interest
savings you can expect, there’s breakeven rates in terms of how much you’ll be
saving in interest for this versus the 30-year fixed, a whole results page of
all the detail that you could possibly imagine on this product that really kind
of drives the message home. Keith: And, I know you can go up to 80% loan to
value on a primary residence or 70% to 75% with this all in one loan with
income property. So, from here at Ridge Lending Group in Portland, Oregon for
Caeli Ridge. I’m Keith Weinhold. Thanks so much for stopping by.