This story was published in the San Francisco Sunday Chronicle Real Estate Section
- Property type: An owner-occupied single-family residence in Palo Alto
- Appraised value: $1,425,000
- Borrowing amount: $1,068,750
- Loan type: 10-Year Fixed Rate, Interest-Only Payment Option, 40-Year Term
- Rate: 3.500% / 3.548% APR
Clients successfully consolidated two car loans, four credit cards, a home mortgage and a home equity line of credit into one new loan. At 3.50%, the interest rate on the new loan is about 40% percent lower than the weighted-average interest rate of all the debt they paid off. Additionally, the new monthly payment is less than half the amount clients had to pay for their separate debts before the refinance. The client’s monthly cash-flow increased by $3,117 which they can now use for more a productive purpose like funding retirement accounts that earn more than the rate on the new mortgage and which grow on a tax deferred basis.
The new loan allows for interest-only payments for 10 years, but this is only an option. Clients are free to pay down principal on the new loan anytime they wish. Also, the new loan has a built-in fixed rate conversion option