A high-net-worth borrower looking for a mortgage faces unique financial challenges and opportunities. A conventional limit may not cover the loan amount you need, which could lead to a higher interest rate and more fees. You may also have more options in the type and term of your mortgage, which can affect your monthly payments and your total cost of borrowing. In this article, Rachel Esker, CFP®, Boulay Wealth Manager, clarifies how you can benefit from the Schwab/Rocket Mortgage partnership to get the best possible rate and how to choose the right mortgage type for your circumstances.
Utilizing the Schwab/Rocket Mortgage Partnership
In 2012, Charles Schwab Bank partnered with Rocket Mortgage, formerly Quicken Loans, the nation’s largest mortgage lender. Through this partnership, qualified Schwab clients who apply for a mortgage with Rocket Mortgage can get a lower interest rate for their home loan. The program offers exclusive discounts and benefits, including:
- Competitive rates and exclusive discounts for Schwab clients
- Access to a wide range of loan options, including jumbo loans up to $3 million
- Access to a dedicated team of mortgage experts who can provide personalized guidance and support throughout the process
To qualify for the Schwab/Rocket Mortgage partnership, you must have a Schwab account with at least $250,000 in assets or have made at least $100,000 in deposits in the past 12 months. You must also meet Rocket Mortgage’s credit and income requirements. You can use a mortgage rate calculator or discuss your options with a financial advisor to estimate your borrowing ability.
Choosing the Best Mortgage Structure for Your Situation
Another way to get the lowest rate and the best mortgage structure for your situation is to compare different loan options and scenarios. There are several factors to consider when choosing a mortgage, such as:
- Loan Amount: If you need a loan amount that exceeds the one-unit home conventional limit ($766,550 in most areas in 2024), you may have to apply for a jumbo loan. Jumbo loans typically have a higher interest rate and stricter underwriting standards. However, some lenders may offer lower rates or more flexibility for jumbo loans, especially if you have a high credit score, a low debt-to-income ratio, and a large down payment.
- Loan Term: The loan term is the length of time to repay your mortgage. The most common loan terms are 15 and 30 years, but you may also find other options, such as 10 or 20 years. Generally, the shorter the loan term, the lower the interest rate, but the higher the monthly payment. Conversely, the longer the loan term, the higher the interest rate, but the lower the monthly payment.
- Loan Type: The loan type refers to the interest rate structure of your mortgage. The most common loan types are fixed-rate and adjustable-rate mortgages (ARMs). A fixed-rate mortgage has a constant interest rate and monthly payment for the entire loan term. An ARM has a variable interest rate and monthly payment that can change periodically based on a market index. Generally, an ARM has a lower initial interest rate than a fixed-rate mortgage, but it can increase or decrease over time, depending on the market conditions. Consulting with a wealth management advisor can help you discern the most viable option for you and your financial future.
- Down Payment: The down payment is the money you pay upfront for your home purchase. The minimum down payment required for a conventional loan is usually 3%, but it can be higher for a jumbo loan, depending on the lender and the loan amount. The more you put down, the lower your loan-to-value ratio (LTV), the percentage of your home’s value you borrow. A lower LTV can help you qualify for a lower interest rate, avoid private mortgage insurance (PMI), and reduce your monthly payment. However, a larger down payment means less cash is available for other purposes, such as investing or saving. You should choose a down payment that balances your short- and long-term financial needs.
Helping You Get There…
As a high-net-worth borrower, you may face unique challenges when going beyond the conventional borrowing limits. Through the Schwab/Rocket Mortgage partnership, you can benefit from special offers and advantages that may reduce your interest rate and closing costs. Selecting the most suitable mortgage plan for your needs also improves your total borrowing cost and positions your mortgage within your financial plan. A trusted wealth management advisor helps you evaluate your options and make the best decision for your financial goals. Connect with a Boulay Financial Advisors, LLC member today to learn more about how we’re committed to helping you get there.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Investment Advisory Services offered through Boulay Financial Advisors, LLC a SEC Registered Investment Advisor. Certain Third Party Money Management offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC
Boulay PLLP and Boulay Financial Advisors, LLC are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc. Prime Global is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc.