What is an Equity Builder Loan?
The Equity Builder Loan is a first lien HELOC that replaces your traditional mortgage. Instead of a fixed monthly payment on a slowly declining balance, your income and savings sweep daily against your mortgage balance, dramatically reducing the interest you pay and accelerating your payoff timeline.
How is the Equity Builder Loan different from a traditional mortgage?
A traditional mortgage calculates interest once a month on your full outstanding balance. The Equity Builder Loan calculates interest daily on whatever your current balance happens to be. Because your income sweeps into the account nightly as a direct principal reduction, your balance declines much faster and you pay significantly less interest over the life of the loan.
How does the daily sweep work?
Every night at midnight your Equity Builder checking account balance sweeps against your mortgage balance as a direct principal reduction. The next morning your checking account shows zero and your mortgage balance is lower by that exact amount. As expenses go out throughout the month the HELOC replenishes your checking account accordingly.
How much could I save with an Equity Builder Loan?
Savings vary depending on your income, monthly expenses, and liquid savings. However many Equity Builder clients save $200,000 or more in interest compared to a traditional 30-year mortgage and pay off their home in 7 to 10 years instead of 30.
What is the interest rate on an Equity Builder Loan?
The Equity Builder Loan carries a variable rate that adjusts on the first of each month. It is calculated by adding a fixed margin to the 30-day average SOFR index. The rate has a floor of 3.75% on primary and second homes and a ceiling of 6% above your starting rate, giving you a defined worst-case scenario to plan around.
Is the variable rate a risk?
The variable rate is the most common concern we hear and it is a fair one. However because your balance declines so much faster than it would on a traditional mortgage, a rate increase applied to a significantly lower balance often costs less in actual dollars than a lower fixed rate on a balance that barely moves. We encourage every client to run their numbers and see the full picture before making a decision.
Who qualifies for an Equity Builder Loan?
Strong candidates typically have stable consistent income, a monthly surplus of at least $1,500, liquid savings they can deploy into the account, and a primary residence or second home. The loan works best for borrowers who consistently spend less than they earn and want to build equity faster without changing their lifestyle.
What types of income can I use to qualify?
The Equity Builder Loan accepts several types of income for qualification purposes. In addition to traditional W2 employment income, you may be able to qualify using Asset Depletion or Bank Statement income. This makes the loan accessible to self-employed borrowers, business owners, retirees, and others whose income may not fit the traditional mold. Reach out to our team directly to find out what works for your situation.
Can I use the Equity Builder Loan to purchase a home?
Yes. The Equity Builder Loan is available for both purchases and refinances on primary residences and second homes.
Can I use the Equity Builder Loan to refinance?
Yes. If you have an existing mortgage you can refinance into an Equity Builder Loan. Many clients choose to refinance specifically to take advantage of the accelerated payoff and interest savings the loan provides.
Is this available for investment properties?
Yes. The Equity Builder Loan is available for primary residences, second homes, and investment properties. The rate floor on an investment property is 4.75% rather than 3.75%.
What happens to my checking account?
Your Equity Builder checking account functions like a normal checking account. You can use a debit card, set up direct deposit, pay bills, and make transfers. Because the account sweeps to zero nightly some instant verification apps like Venmo may have trouble connecting at certain times. The simple workaround is to keep a traditional checking account active for those situations.
When will I receive my checking account after closing?
Your Equity Builder checking account details will arrive approximately four to five weeks after closing, first via email and then as a physical packet in the mail that also includes your debit card.
When is my interest charge applied?
Your monthly interest charge is applied on the 21st of each month based on the total interest collected for the previous 30-day calendar month.
Is there an annual fee?
Yes. The Equity Builder Loan has an annual fee that typically ranges from $69 to $149 depending on your state and program. Your loan officer will confirm the exact amount during the closing process.
Do I need an escrow account for taxes and insurance?
No. Unlike many traditional mortgages the Equity Builder Loan does not include an escrow account. You are responsible for paying property taxes and insurance directly which gives you more control over your money.
How do I get started?
Reach out to our team directly. We will walk you through your specific scenario, show you your projected payoff timeline and interest savings, and answer any questions you have along the way.