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EFI™ Main Uses

Home Purchase

 

Buying a home is one of the largest investments you can make. So large that the payments can keep you from achieving other savings goals. But now you can reduce your monthly payment by up to 20% and use some of the difference to save for college, retirement, or home improvement.

How Does the EFI Reduce My Payment?

Through an EFI, you can reach the 20% down payment threshold in order to obtain a conventional mortgage. By doing this, the size of your conventional mortgage may be smaller, and you can avoid PMI. There are no payments on the EFI, so your total monthly outlay is reduced.

Examples

Without Using an EFI with 90% Mortgage @4%

  • Home Price: $585,000

  • 10% Down Payment: $58,500

  • PMI: $195 per month

  • Total Mortgage and PMI: $2,708.59

 

Using an EFI to reduce to 80% Mortgage @4%

  • Home Price: $585,000

  • 10% Down Payment: $58,500

  • 10% EFI: $58,500

  • 20% as total downpayment: $117,000

  • 80% Conforming Loan: $351,000

  • Monthly Mortgage: $2,234.30

  • Total monthly savings$473.29

 

The total monthly savings provides many benefits, including:

  • Making home ownership possible with affordable payments

  • Freeing up cash for home improvements

  • Savings for retirement or to fund college education

  • Additional living expenses and additional insurance needs

Mortgage Refinancing

 

If you’ve built up equity in your home or used an adjustable rate loan to purchase your home, you may want to use an EFI™ to pay down your mortgage and refinance with a lower loan value. This way you can reduce or eliminate your monthly payments and be able to save more for retirement.

How Does It Work?

With the rapid rise of home prices, your home is probably worth quite a bit more than when you bought it. The difference between what your home is worth and what you owe is your equity. Using an EFI, you can convert up to 20% of your equity into cash, which can be used to pay some or all of your mortgage balance. That allows you to refinance the remaining balance, resulting in a lower payment, or no payment at all. This is especially attractive to homeowners approaching retirement, who are looking to reduce their monthly expenses, or those with interest only or adjustable rate mortgages.

Can I Get Cash Out?

Sure! And you can use that cash to fund other long term financial goals – all without increasing your monthly payments.

Examples

Before Refinancing with an EFI™

  • Home Appraisal: $800,000

  • Outstanding Mortgage Balance:  $200,000

  • Monthly Mortgage: $1,799

After Refinancing with an EFI™

  • Home Appraisal: $800,000

  • Refinance EFI™ (25% of Home Value): $200,000

  • Outstanding Mortgage$0

  • Monthly Mortgage @4%$0

  • EFI % of Future Value of the Home: 40%

Retirement Income

 

For many Americans, a large part of their income goes toward making their monthly mortgage payments. As a result, they may be underfunding college savings, retirement plans, and other long-term financial needs. Often, a large part of their net worth is in their home equity. But home equity is locked away and unusable, unless you sell your home, or borrow against home equity incurring additional debt.

Now, an EFI lets you unlock some of your home equity – without having to move – and use that value to save for other long term financial goals.

Baby Boomers – Through an EFI, a homeowner can convert home equity into other investments to diversify their assets and better ensure future retirement income.

Retirees – Rather than initiating a costly reverse mortgage or selling a home outright, an EFI may be used to fund an immediate income stream such as a mutual fund with systematic withdrawals or an annuity with lifetime monthly payments.

College Funding – Homeowners with sufficient equity can obtain an EFI to fund a 529 College Saving Plan without cash flow strain.

Examples

With an EFI, a retired couple can convert a portion of their home value into cash for the purchase of an immediate annuity to create an additional amount as annual lifetime income

  • Appraised Home Value: $800,000

  • Savings EFI Beginning Balance: $200,000 (20% of current home value)

  • Annual Social Security Income: $18,000

  • Immediate Annuity Lifetime Payment*: $12,000

  • Total Annual Income (with Social Security): $30,000

  • Additional Debt: $0

*For illustrative purposes only