HELOC AIO All In One

[Josh Belgard]

Seeking a bank that offers a prImary resIdence HELOC (All In One). We use PLOCs for our rentals and they work very well. We don’t want a fully amortized loan but a simple interest HELOC. Any bank leads are welcome. We’re in Louisiana and appreciate the information.

[Russell Roberts]

@Megan Brooks

I completed the purchase of a new SFR for 120K financed via an All in One loan originated by Ridge Lending group. Below is my experience and thoughts.

I signed purchase contract and submitted to Ridge on Jun 8, 2020. They did tell me they were busier than normal and, to be fair, I had not pre-qualified with them. But I am able to easily qualify and submitted a full package of electronic documents to them on the same day. The process of getting loan approved was one of the most detailed (from documentation required) I’ve experienced thus far. Despite me supplying each additional document required within a day of the request, the entire process to funding and sale close date took until Aug 12, 2020. (65 days to close)

Terms:
25% down payment.
2.5% loan origination points on loaned amount, plus other closing cost
1-month LIBOR index plus a margin of 3.75%. The margin is fixed, the index is the variable part. Current rate is 3.
My normal closing cost (excluding prepaids on insurance & property tax) for a conventional 30yr mortgage for similar SFR has been $3800 - $4100 range. The All In One, was $7822. $2,250 of that was the 2.5% loan origination points on this type of loan. In addition, I had to pay an additional 1% down payment so that there was time for the loan to get transitioned to the final lending institution before interest accrued and exceeded the max approved credit limit before I had a chance to make a payment. It took until Sept 11, 2020 (30 more days) before the associated account with Northpointe Bank was set up.

Conclusions:
Loan took twice as long as normal and was more difficult from documentation standpoint.
I paid 26% down payment.
The closing costs were nearly $4,000 above normal.
My credit score immediately dropped from 804 to 775 (with nothing else changing except for the AIO hitting my credit report)
The floating interest rate is reasonable.
The remote banking with Northpointe Bank checking account, mobile app, ACH, autopayment scheduling is all good.
I’ve made this my primary depository account and auto payment source for other mortgages.

Am I happy with the decision? Yes.
For ONE property in an investment portfolio, I like this line of credit flexibility. Instead of letting idle $ (money being saved for future purchases, cash liquidity for repairs, etc) sit in a near 0% checking account, it now sits in the AIO which immediately saves a guaranteed 3.9% interest expense, secured by a SFR that is otherwise making positive cash flow, appreciation and such. It'll take me 2-3 years to recoup the extra front end loan cost, but I'll have the line of credit tool available for many years to come (assuming that interest rates stay reasonable).

Hope this helps anyone else considering this funding option.