All In One Loan vs 30 Year Mortgage: Why Rate Matters

Next is All-in-One updates. I'm gonna bring in Greg, who's in the house. He and I are partnered together, works with Harrison George. Many of you who know, I've had him on my channel a couple times. Greg is also a, a strategic person on the team who will literally help behind the scenes. So I'm just bringing another face to the name so that you can see who he is He can introduce himself. I want to give you the floor just to talk about the all-in-one product, otherwise known as a first position home equity line of credit. Anything that you see that's just happening in the marketplace and in your world, where rates are, anything you want to share that would be valuable for anyone watching that is considering replacing their 30-year mortgage, their traditional mortgage, with a first lien HELOC. Or maybe they're looking to purchase a primary residence and they're comparing a traditional mortgage with a first lien HELOC purchase. I'm going to give you the floor here, and then let me know if you need to share your screen because I'll give you permission to do that.

A privilege to to be with the partners that we work with and to be talking with the community, um, that, you know, that Denzel has cultivated through his channel and coaching. And so I'm grateful for that. Um, you know, in terms of the all-in-one, a couple of, couple of updates. One update that's current and then a couple of updates that are in the future but we're working through. Um, we have recently released a bank statement income qualification for the all-in-one. So traditionally, the all-in-one is a full documentation income qualification, meaning you're going to provide bank statements, uh, pay stubs, W-2s, tax returns, and we'll look at your entire kind of tax basis, you know, profile, and calculate a debt versus income ratio. Based on that full-doc income calculation. But for my self-employed, you know, business owners, a lot of times folks have savvy CPAs or they're savvy themselves with how they file their taxes, and they utilize legal tax loopholes to offset their income tax. And when they do that, it decreases their allowable income for a mortgage. And so there's always this back and forth between like, I don't want to— I don't want to pay too much in taxes, which I totally understand, But it limits you, it hamstrings you when you are trying to qualify for a mortgage. And so one of the ways that you can work around this is that we can utilize an income qualification process called using your bank statement, bank statement income. So we'll take business bank statements for 12 months. We'll total up the total deposits into a business checking account. Revenue generated through a business, and then we'll divide by 12 to get a monthly average, and then we'll deduct a percentage of it to accommodate— I love that, Jerry— to accommodate the kind of the overhead that you run your business with. So for example, if you're a one-person sole proprietor and you're providing a service, a realtor would be an example of this, there's going to be a very small amount of overhead, right, because you're not producing any goods. Your overhead is by and large advertising, gas driving to showings, business cards, etc., versus say somebody who owns a restaurant, right? They're going to have a larger amount of overhead. And so we take a percentage of whatever those deposits are, but what's remaining is your qualifying income. And 9 out of 10 times that qualifying income is much higher using a business bank statement methodology than it is using your tax returns. And so for business owners out there who are interested in the FirstLend HELOC product, we have a new, a new income qualification model. So worth, worth looking into. And then in terms of what's upcoming, we have a, a number of product enhancements to basically expand and grow the unique elements of the all-in-one to different areas of the market. So, um, this is not a guarantee, this is merely just conversation, but there is conversation about, for example, a DSCR product using a First Lien HELOC. So for all of you real estate investors out there that are aware of a DSCR loan, DSCR stands for Debt Service Coverage Ratio, meaning does an investment property Cash flow, the rents you collect, does it, does it pay the mortgage plus some? And if it does and you have decent credit and some reserves, you can get an asset-based loan to buy or to refinance an investment property. That's what DSCR stands for, debt service coverage ratio. We're evaluating what we would need to utilize an all-in-one structure, a first lien HELOC structure with a sweep checking account. Based on a DSCR income qualification. So there's some additional enhancements. We're looking at increased loan amounts, we're looking at business bank statement, um, you know, we're looking at 1099 options, the DSCR options. So we're really trying to grow and expand the opportunities we have on the All-in-One side. None of those are finalized yet, and, and so I'm just giving a little bit of a teaser, but the business bank statement income qualification is— so if you've been prevented from getting into a first lien, uh, first lien HELOC, or even just getting into a mortgage because you are a business owner and your tax returns don't allow for your income to be qualified, you know, give me a call, shoot me an email, just drop my info in the chat. But, uh, we, we have some options for business bank statement, um, qualifications. So, you know, in terms of, of what's upcoming, that's the biggest thing. Quick overview, uh, of the all-in-one, just for a reminder. I, I know you guys are familiar, so I'll be very brief. But again, the all-in-one is CMG's branding for Firstling HELOC. So you have a home equity line of credit that encapsulates up to 90% of the value of a property. So you have up to a 90% HELOC on the value of a property. That HELOC encapsulates the principal balance on what you owe on your mortgage. And there's a checking account that's linked to this HELOC that is set up to make automatic sweep deposits. So if I deposit $1,000 into my checking account today, Tomorrow, my checking account is going to say $0 and my principal balance on my FirstLink HELOC is going to be reduced by $1,000. It's automated. It captures all of the money. You don't have to make any manual transfers. It's not outside of Texas. It's not— you don't miss anything. You don't miss any opportunities. You allow the vehicle to do it for you. And so it's a very, very powerful way for debt reduction. And in the future after debt reduction, wealth accumulation. Uh, Denzel, you asked about rates specifically. So Denzel was talking about prime rate at 6.75. The all-in-one actually uses, uh, the 30-day average SOFR. The SOFR and prime move in the same patterns, but they start from a different place. And so both move, generally speaking, when the Federal Reserve makes a benchmark interest rate decision. SOFR tracks exactly what the banks are trading money at. So in any sort of HELOC, really what we're talking about— banks allow customers to borrow money at a certain cost because that's what they're borrowing the money at. So the 30-day average, so for— I think today is like 3.59%. So if I'm a bank and I'm lending Denzel money, my money costs me 3.59%. And then the way that I make money is I add a margin on top of that in order for my profit, you know, to grow based on that. Our margins are anywhere between 2.5 and 4 on top of SOFR. So SOFR has not moved since Q4 of 2025. Um, so in the last approximately 20 months, it's moved a total of 3 times. So the, the all-in-one rates have come down 3 times in the last 18 months, but by and large have been very stable. It's one of the reasons that we really like having the SOFR as our, as our, our index for variability, because it doesn't move in the same way that the Treasury bonds do. Over the course of time, throughout all of the conflict with Iran, the SOFR really hasn't moved because the Federal Reserve hasn't changed any of their interest rate policy. They may in the future this year, but they haven't yet. And so the all-in-one rate hasn't really moved, hasn't really changed. Projections out into the future, pretty tough to know. We're seeing some inflation that is being a bit more persistent due to the cost of energy right now, but it appears that we're at at least a 60-day ceasefire in the Iran conflict, which hopefully is going to bring the cost of energy down. The Strait of Hormuz is opening, so more oil is flowing, so cost of energy comes down. Hopefully, quells that inflation and we settle and don't see any need to increase interest rates. That's the hope. But yeah, I mean, I think the biggest thing to me is that really, as we think about even if the Fed were to raise benchmark interest rate by, say, 0.25% towards the end of the year, for all of our all-in-one users, if we've done our job as loan officers and coaches, then you getting into an all-in-one isn't going to be derailed by a 0.25% increase in interest rate because your cash flow, in order to make the all-in-one successful, is going to be far and away exceeding what you need to pay a 30-year fixed mortgage, right? Your cash flow reducing your principal balance to allow for velocity banking, to allow for principal reduction, and eventually to allow for wealth accumulation is going to exceed the pace that we want to see, or that we would need to see for a 30-year fixed mortgage. And you're going to be so far out in front of it that even if you did increase interest rates, or interest rates were increased, that is, slightly, your, your progress wouldn't be derailed, right? Your progress would, would grow still because interest rate isn't as significant when you're comparing to a 30-year amortization schedule. Now, when you're comparing revolving account side by side, of course you want to pay attention to interest rate. That's what Denzel Rodriguez was talking about in the beginning of the call, 8.5% versus a, you know, 2.5% intro rate and then a 7.5% rate with the credit union in California for his client. Of course you want to pay attention to that because then you're looking at apples to apples. But, you know, 6% or 6.25% on a revolving account versus 6% on a 30-year amortization schedule isn't even a question because for the person that has the right budget, for the person that can reduce their principal balance aggressively and consistently over long periods of time, the simple interest that comes with the revolving account, that comes with the first thing, HELOC, is going to be so much further superior than the amortization schedule on 30-year fixed that the rate almost is inconsequential. And so knowing how to leverage the vehicle, knowing how to leverage the structure makes the rate far less critical, although still important, but far less critical than when you're navigating that 30-year amortization schedule. I just threw a ton out there. Um, anybody have any questions? Even Denzel, any follow-up on that? I'm happy to dive in further on kind of any of those topics, any of those things, but I want to get through some of those bullet points that you discussed.

Thank you, thank you. Yes, I do have some questions, and I'll start with a Testimony back to the point of business bank statements. My experience, so just so you guys know, I got a first lien HELOC with University Bank and the process was quite gruesome in terms of the approval. I'm that example of self-employed, savvy, taking a reasonable wage, right? W-2 salary and writing off the rest of my income. So on, on paper, when I file, obviously I'm trying to report the least amount of income to be in the lowest tax bracket. Yet that does affect you when you try to apply for a $600,000+ property and you're saying you only make $70,000 a year in salary. That doesn't, you know, add up too well. So in my experience, when you mentioned the business bank statements, at the, at the time they were already taking my business bank statements and still saying that on the personal side that I'm not showing enough income, and the types of debts that I had on the personal they wanted me to pay off. So I had like 3 car leases at the time, and they wanted me to pay, I think, almost like $12K toward my car leases. So they're basically asking me to advance the payments on the car lease, which is not in my favor, because if I get in a car accident and I total one of those cars, I lose that money. I don't get that back in a lease. Now obviously I won't be on the hook for the full value of the car, but still I lose that cash and I'll still have to get another car and then restart a lease. So that was a risk I was willing to take to get the product at the time. But I can tell you that those of you who had that, that struggle or even got denied because of some of those reasons on— for those that are on the, on the business side, that just being able to go off business bank statements last 12 months— in my case, they were just looking at the last 2, 3 months, which also was not in my favor. During that time, I wasn't necessarily having my high income months during that time of getting that property at that specific point. Usually my highest months are at the top of the year And as I was approaching the end of the year, this, for whatever reason, I just didn't bring in as much money as I typically would. So they didn't, they didn't take the full 12-month average. They were only looking at the last, you know, 2, 3 months, if that, of that process. So that is just my experience there. I'm gonna follow up with a question. On the rates, so it's a 30-day average of the rate. So if the rate changes, then your all-in-one, if it goes up or down, you would experience a change in the following month, right? Correct.

Okay, cool. Correct. Yeah, the 30-day average SOFR is the actual index. That's the title of it. You can track it on the Federal Reserve Bank of New York website. It's the one that we use for the actual product. Um, so, you know, easy to, to look at. It's public, right? We're not, we're not hiding any information. We're, we're showing you how we measure the market. But it's a similar index to Prime, like I said, in the way that it moves. But yeah, you're correct, you would experience it the following month.

Gotcha, gotcha. And if anyone else has questions, definitely drop in the chat or raise your hand, and I'll definitely give you the floor. In terms of the DSCR product In the traditional sense, a DSCR loan would normally be a 30-year fixed mortgage on an investment. Is that right? In the normal sense. So what you're saying is we're getting ready to roll out a product all in one. I'm assuming minimum 1 to 4 units.

Uh, yeah, and again, I'm floating the idea. The product is being discussed and being hammered through the guideline process. So I want to be a little cautious in how much I tease, but I share that not because I want you to be ready for the product next month, but rather because I want you to know that CMG is looking for more and more ways for us to grow, how we can expand what you guys already know about utilizing revolving credit and simple interest to your advantage rather than buying into the narrative of 30-year amortization schedules. There are additional ways that we can provide value to customers by expanding the opportunities with a First Lien HELOC product. And so that's what we're trying to do. We're trying to grow in areas that currently the market doesn't have— yeah, doesn't have exposure.

Yeah, no, that, that's, that's huge. I mean, DSCR alone is a phenomenal product for the right, for the right person. Most people don't know about it. And I was actually having a conversation with The same guy that was just mentioning about him getting a second lien with that local credit union in his county, we were talking about DSCR and he asked me, you know, do you know if you could get a DSCR but have the product being a first lien? And I told him no, because I was like, that doesn't exist. And here you are saying, hey, we're working on that. So that just goes to show that, okay, customers want this. Especially if they're in the world, they've done velocity banking, they're, they're accelerating debt. Being able to have that large of a revolving line of credit on the business side is incredible, because if you're talking to an entrepreneur where the majority of his or her income is already business, now they can drive all that revenue into that business line of credit. It can be their main business operating account that's literally backed by an asset, real estate. Talk about levels and levels of safety, liquidity, and control. That is a major game changer. So like, I think about in my own business, if my company decides to buy real estate, then not only can I purchase the real estate in that, in that business, Maybe there's an argument to separate companies for liability purposes. There's definitely that argument. But let's say your business is real estate and you're running a property management company and you get a first lien on one of your properties. All your other properties are separated in other LLCs. You just take one property, put it under the real estate management company that you're running, have the all-in-one as your business operational account, and then all invoicing and revenues, even payroll— I mean, everything can flow through the all-in-one. You're only obligated to cover the interest, and the property itself would— we would imagine the only rate you would get approved is because the property is already a turnkey, it's cash flowing. Or all the numbers would say. So that's blowing my mind already, and hopefully that does come through. And then product expansion, I think that's huge. I threw out credit cards as like, you know, how cool would it be if I had a first lien HELOC at the bank driving all my income to and then I can also have a credit card with a promo rate with that same bank. I can sort of stack what's called promo stacking. I can stack these promo rates and sort of park debt in 0% credit cards, maybe one, maybe two, and continue to reduce that interest cost on a daily basis. So there's a lot of, a lot of cool things there. Does anybody have questions for Greg before I move on? Any questions at all, raise your hand, use the hand raise button, or just drop it in the chat. If not, I'm gonna go ahead and move on. Greg, is there anything else you wanted to add?

Uh, no, I mean, just, just thanks for the opportunity, man. And what you're talking about with credit cards, with credit stacking, all of the things that are growing at Bank CMG, uh, which is, which is a banking institution that CMG Mortgage Company acquired over the course of last year. All the things that are growing, uh, are moving towards creating authentic, holistic, uh, banking relationships with consumers. Where we previously have just been a mortgage company and could only help with residential finance, we do want to help with, uh, with credit card, with car loan, with, with all of the things that, um, you know, that, that typical banks help with, but with a holistic approach And I think a lot of our experience in the velocity banking space and listening to the ways that people can leverage Simple Interest in order to offset major debts and to push themselves towards a debt-free lifestyle with wealth accumulation on the backside, those are the types of things that we want to help consumers do. And the BankCMG side of the business just is going to help to grow and expand that. So Hearing you talk about that, you know, I'm excited about what's coming in the next 6, 12, 18 months for BankCMG and CMG Home.

Beautiful. I had another question that came back in my mind. So back in 2020, 2021, rates were at all-time lows. I had— and this is before I met you, before I met Harrison— I had so many clients getting all-in-ones, first lien HELOCs, locking in 3-year, 5-year fixed rates.

3-year, 5-year. Yep. Yep.

That, that went away when rates shot up. Do you foresee those 3-year, 5-year rate products potentially coming back depending on, depending on if rates continue to reduce? I know we just got a new Fed chairman. And I also was reading and watching that there. I want to say the new Fed guy is trying to reprice or redefine how the Fed rate gets determined. And that came—

yeah, so he's—

that's interesting.

His stuff is fascinating. He like, he's looking at different inflation metrics that highly downplay volatile components of the economy and look at the underlying core elements of the economy that get a more holistic sense of inflation rather than inflation caused by short-term geopolitical events, for example. So inflation skyrockets when we see things like the cost of oil increase because of the conflict in Iran. And the metrics that the Fed currently uses is like, PCE, for example, it is reliant on energy costs, and energy costs can be so volatile. The new Fed chair, Kevin Warsh, is arguing, hey, let's look at some additional inflation metrics that actually are more longitudinal, are more holistic, and are less responsive to short-term blips, either good or bad, so that we get a better sense for the underlying bedrock of the economy. There's pros and cons to any decision like that, but I can say that it appears that it would give a more nuanced version of a longer look at where the economy's at in terms of inflation, rather than a more contracted look on what's happening right now in response to, for example, the war in Iran, or we saw this happen with the war between Russia and Ukraine and the way it affected agriculture. So we see these spikes and it's like, well, the entire US economy doesn't just implode based on what's happening in other places. It is affected, certainly want to acknowledge that, but there are other metrics that we can utilize in order to evaluate. And so those are the conversations he's bringing to the forefront. It'd be really interesting to see what the Fed chooses to adopt and not adopt and how that impacts, like you said, benchmark interest rate.

And with that, do you foresee all in one, CMG bringing back the 3-year, 5-year fixed rate options. Granted, there's a certain amount that the rates decrease by. What would you think would need to happen? And another point, point and a half?

Yeah, that's a good question.

And, or is it even a matter of, or is it even a matter of rates going that low again for that to come back? Would that be a question?

Yeah, good question. I, I think it's something that, that consumers want. Um, you know, it's that even if your rate is just a touch higher, people like the predictability of a fixed metric. Even if they understand the math behind the variability in the all-in-one now, like I discussed earlier, they still like the, the predictability of a fixed metric. And so I think there's certainly a demand in the market for the 3 and 5-year fix to come back. What the rate needs to get to, honestly, I'd be speculating. I would say low 5s, maybe high 4s, in order to bring it back. I don't know that. I don't have that information. It's not something that's been shared with me. But I do know that there is the conversation both, um, internally with CMG and, you know, conversation I hear in places like this with consumers that currently have the product, with folks that are asking about the product, that a fixed intro rate certainly is something there's an appetite for. So If I were to guess, and that's all it is, I would say that if we're consistently in the low 5s, uh, that's something that, that CMG would consider— CMG and its, its, uh, investment partners would consider bringing back. Um, again, that's just my speculation. That's not— there's no insider information there. Yeah. Um, but I would say if we were in the low 5s, that would be my, my gut.

Okay, very helpful. Thank you for that. I will go ahead and move on. Thank you for your time, Greg. Appreciate you. You can hang around as long as you can. And again, if those have— anyone has questions, and you can drop it in the chat, and, you know, Greg will respond to that.

Absolutely. Thanks, man.

Yeah.