The tax effect of a biweekly loan reduces the interest deduction, faster than the conventional amortization schedule would.  A sophisticated borrower would look at the income tax implications of his total financial picture. A biweekly loan generates less deductible interest for tax purposes.   

This borrower could also go beyond the tax consequences, and look at their overall picture. He might ask, “Which investment do I want to liquidate in order to place a substantial down payment on a home?” The real question should be “Why tie up money for a down payment when I can invest that money elsewhere for higher financial leverage. Also, the borrower could refinance the home when the mortgage reduces itself to the point that it no longer maximizes the desired tax benefits. History shows us that the average refinance is every 4-5 years.

There is a school of thought in the financial planning community that views some insurance products negatively. The logic is that the most effective strategy when buying investment insurance is never to buy universal, whole life or annuity products. The better approach is to purchase the lowest cost term insurance available and put the premium savings in alternative investments, such as mutual funds. Some investment counselors might suggest using a term insurance product. However, not every homeowner has an investment counselor, or has the discipline to save on his or her own.

Granted, there are other ways to achieve financial gains. The Mana Loan™ is a unique and specific mortgage loan product; a mortgage loan /retirement fund/ mortgage emergency payment fund with death benefits, all rolled into one. Once the homeowners are in the Mana Loan™ program, they have implemented a life long savings plan towards supplementing their social security or creating a college fund for their children. 

The Mana Loan™ also gives immediate protection to the lender.  The lender has the option to withdraw funds from the cash value of the policy to make the mortgage payment, and receives the money within ten days, to prevent default.

The life policy is portable from home to home, except, should the homeowners have to sell or dispose of the home within the first eight years, and home prices have not appreciated, they might have to cash in the policy to pay off the principle balance. 

This is one of the advantages of the Mana Loan™.  The cash build-up of the policy may make-up some of the short falls of selling the house if indeed the house did not appreciate enough in value before the homeowner had to sell the home.

The PMI should be noted.  It is an insurance policy the borrowers pay for that does not return a benefit to them.  The borrowers buy a policy that benefits the lender instead of them. 

PMI is money improperly spent.  However, most lenders require it.  Instead of having the PMI payment in addition to the mortgage payment as in a conventional mortgage loan, Mana Loan™ is designed so that PMI is rolled into the interest rate, thereby creating tax deductions for the borrowers.

One benefit to the Lender is higher yield.  If it can be shown that the mortgage with the added collateral is less risky than a conventional loan, the lender can justify the higher interest rate.  However, the rate should be competitive.  Obviously, if volume is the goal, then the 50-100 basis point spread might have to be reduced. This is a strategic business decision. Making the product more attractive and less expensive to borrowers will add to its appeal and increase volume.

In our example, we show a higher rate for the lender as a way to increase profits, and our research concludes that the increased rate would probably not hamper sales. However, offering this unique product at par would still generate new business not previously accessible.

Once a borrower gets into the program and rapidly builds equity, he may be more inclined to sell, since he cannot readily refinance at a lower rate.  A borrower seeing mortgage rates drop might be induced to cash in the policy and obtain a conventional mortgage. 

This is another great feature of the Mana Loan™.  When a homeowner wants to refinance because of lower interest rates the most likely mortgage company to do the refinance is the original lender.  Because of the uniqueness of the loan, the original lender creates life-long customers for refinancing and moving the Mana Loan™ from one home to another.

In conclusion, the Mana Loan™ has merit, and with the proper marketing will become a leading force in the mortgage loan market. THE TIME IS NOW!

MANA COMPANY, LLC
P.O. Box 20595
Seattle WA 98102

Evelyn Nichols
1-800-506-7563