The process
From first call to closing.
Six steps bring together a jumbo mortgage, an indexed universal life insurance policy and the bank loan that finances part of its premiums.
Steps one to three
Before you apply
- 01
With Kent Chesley
Fit review
- What happens
- You tell us about the purchase, and Kent Chesley reads it and speaks with you. The question at this stage is narrow: whether the program suits the home, the timing, the capital you have available and what you want the home to do for you later.
- What you provide
- The price range, timing and state of the purchase. Ranges for your assets and income. Whether about half the price is available, and the age band of the person who might be insured. Ranges, not statements.
- What you receive
- A direct answer on fit.
- 02
Your home, your numbers
Personalized comparison
- What happens
- A comparison is prepared for your home: the program beside a traditional thirty-year mortgage, at one stated mortgage rate, phase by phase.
- What you provide
- The price, your intended down payment and any assumption you want changed.
- What you receive
- What you would commit at closing, what you would pay in each phase, and the projected policy cash with its margin above the mortgage payment. The carrier’s illustration for the person insured follows at the design step.
- 03
With Paul Finestone
Coordinated design, with your advisors
- What happens
- Paul Finestone designs the policy and its financing for the person who would actually be insured. The mortgage, the policy, the premium-finance loan and the ownership arrangement are reconciled into one plan, and your CPA and your attorney review it line by line.
- What you provide
- Who would be insured, who would own the policy and who would benefit. Your advisors’ details, and the questions they raise.
- What you receive
- The documents the plan rests on: the carrier’s illustration with its guaranteed and non-guaranteed columns, a financing term sheet, a year-by-year ledger of all three debts, and the test results your advisors ask for.
Steps four to six
Approval and closing
- 04
A lender, a carrier and a bank
Underwriting
- What happens
- Three institutions make their own decisions. A lender underwrites the mortgage. A carrier underwrites the insured, medically and financially. A bank approves the premium financing and sets its collateral terms.
- What you provide
- The lender’s usual documents. The carrier’s application and its medical requirements for the insured, given to the carrier and not to us through this site. The financial information the bank asks for.
- What you receive
- Three decisions and their terms: a loan approval, an offer of insurance at a stated underwriting class, and a financing commitment. The design is then run again on the actual terms. If they differ from the illustration, the comparison changes, and you see the changed version before you commit.
This step sets the calendar. Each underwriter works to its own schedule, and we keep all three moving together.
- 05
Two transactions, close together
Closing and funding
- What happens
- The down payment and the mortgage proceeds pay the seller. Your policy contribution, with the bank’s approved advances, goes to the insurance carrier. The policy is issued and the assignments to the lenders are put in place.
- What you provide
- Capital for about half the price. In the reference case that is $800,000 down and $1,200,000 to the policy, $2,000,000 in all. And your signature on three sets of documents.
- What you receive
- The home, a mortgage that is interest only for 15 years, and a policy in force. Also a written record of who is responsible for what: the funding dates, the assignments and the payment arrangements.
The bank’s advances fund insurance premiums, paid to the carrier.
- 06
Every year the plan runs
Annual review
- What happens
- Each year the plan is checked against what actually happened: what the policy was credited and charged, the balance and rate on the bank loan, the collateral, and, from year 16, the cash the policy can support.
- What you provide
- Changes in your circumstances: a move, a sale, a change in health, in the family or in your estate plan.
- What you receive
- An updated illustration from the carrier, a statement of all three debts, and any adjustment the figures call for.
The scope of the review is set out in writing before you close.
Milestones
After closing
Year 16
Projected policy cash begins funding the mortgage.
The bank that financed the premiums is planned to be repaid around year 15. From year 16 the scheduled payment is $27,176.61 a month, and projected policy cash is designed to make it. Loans against the policy can remain after the bank is repaid.
Year 30
The mortgage is repaid.
The last scheduled payment falls at the end of year 30, and the home then carries no mortgage. Any loans against the policy are a separate matter and can continue.
Year 62
The last year of projected policy cash.
In the reference case, $370,000 a year is projected from year 16 through year 62, the illustrated period.
By qualification
Find out if it is open to you.
Three ranges tell you where you stand against the published criteria. If you meet them, Kent Chesley will speak with you personally.
Prefer to talk? Call him directly at 949-293-8686.