Jumbo loan improves cash flow

Mortgage broker: David Cary, C2 Financial Corporation, Sausalito, (800) 400-2772, www.davidcary.com.

Property type: An owneroccupied single-family residence in Palo Alto.

Appraised value: $1.425 million.

Borrowing amount: $1,068,750.

Loan type: 10-year fixed rate, interest-only payment option, 40-year term.

Rate: 3.50 percent.

Backstory: Cary’s clients successfully consolidated two car loans, four credit cards, a home mortgage and a home equity line of credit into one new loan.

At 3.5 percent, the interest rate on the new loan is about 40 percent lower than the weighted average interest rate of the debt they paid off. Additionally, the new monthly payment is less than half the amount the clients had to pay for their separate debts before the refinance.

The client’s monthly cashflow increased by $3,117, which they are now able to use for a more productive purpose. One option is funding a retirement account that can have more earnings than their new mortgage rate and grow on a taxdeferred 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 at anytime they wish. Also, the new loan has a builtin fixed-rate conversion option.