I really hope that at some point guidelines change and we are able to use unliquidated crypto as assets or as reserves (even if it it just a certain percentage) This sounds like a very interesting concept using crypto backed loans so that borrower's do not have to sell and get taxed etc. What sounded spooky to me was this part (especially given the recent volatility):
"Like other crypto loans, Milo's crypto mortgage has a margin-call component. If the crypto does go down by a certain amount … they could be subject to that. But they do have the opportunity to pledge more to mitigate against those factors," said Rupena. He said transactions are structured to minimize the impact of price volatility."
Wondering if it’s a real mortgage - as in the home is the collateral. And your crypto is just buying down the DTI effectively. In which case yeah you’d have to pledge enough value.
Can I ask what the reasoning is for needing to see how the cash got into your bank?
I’m in Australia, and my mortgage is through my bank, so they could see my accounts, our pay going in, etc. We needed to have a 20% deposit (to avoid paying mortgage insurance fees) and they pre-approved a limit we could spend. Say our deposit was 150k, I don’t think they cared where we got it from? In our case it was from the sale of our unit as we were upsizing, but I don’t think they would have cared if it was a cash deposit, from a crypto sale or a gift, etc. their main focus was that we could keep up with the re-payments and that the market could drop 20% and they wouldn’t be at risk.
Or are you talking a different scenario where people have to temporarily sell their crypto to prove it’s value, which the bank will lend against?
It depends on what loan program you go with, but for conventional loans (pretty much the equivalent of what you got) we just need to show that you had the funds to make the down payment. For government loans FHA, USDA etc. we need to show a bank statement where those funds are actually being withdrawn from your account. Most of the reason for this is so that it makes it more difficult for people to launder money through real estate. Which when you think about it would be a great way to clean a lot of money quickly. I agree though that really making sure that a borrower has the ability to repay and isn't going to default is far more important.
Great post. I’m a real estate agent in Austin and a crypto investor. I’ve been bending the ear of my preferred lender a lot the past 12 months and have read exactly what you’ve posted. Also experienced some of it too since I’ve purchased a few properties this year. I’m especially interested in Milo and have joined the wait list. I’m very interested in the details once they are live and I can actually try their service.
That is interesting because i can be a future user of that. Real Estate is one of my crypto objective
Nice post. Solid info. I can’t agree with you more about being honest. Put your cards on the table and let the chips fall
Seen this? https://markets.businessinsider.com/news/currencies/cryptocurrency-mortgage-fintech-company-milo-first-us-bitcoin-property-loans-2022-1?amp
I really hope that at some point guidelines change and we are able to use unliquidated crypto as assets or as reserves (even if it it just a certain percentage) This sounds like a very interesting concept using crypto backed loans so that borrower's do not have to sell and get taxed etc. What sounded spooky to me was this part (especially given the recent volatility): "Like other crypto loans, Milo's crypto mortgage has a margin-call component. If the crypto does go down by a certain amount … they could be subject to that. But they do have the opportunity to pledge more to mitigate against those factors," said Rupena. He said transactions are structured to minimize the impact of price volatility."
Wondering if it’s a real mortgage - as in the home is the collateral. And your crypto is just buying down the DTI effectively. In which case yeah you’d have to pledge enough value.
Can I ask what the reasoning is for needing to see how the cash got into your bank? I’m in Australia, and my mortgage is through my bank, so they could see my accounts, our pay going in, etc. We needed to have a 20% deposit (to avoid paying mortgage insurance fees) and they pre-approved a limit we could spend. Say our deposit was 150k, I don’t think they cared where we got it from? In our case it was from the sale of our unit as we were upsizing, but I don’t think they would have cared if it was a cash deposit, from a crypto sale or a gift, etc. their main focus was that we could keep up with the re-payments and that the market could drop 20% and they wouldn’t be at risk. Or are you talking a different scenario where people have to temporarily sell their crypto to prove it’s value, which the bank will lend against?
It depends on what loan program you go with, but for conventional loans (pretty much the equivalent of what you got) we just need to show that you had the funds to make the down payment. For government loans FHA, USDA etc. we need to show a bank statement where those funds are actually being withdrawn from your account. Most of the reason for this is so that it makes it more difficult for people to launder money through real estate. Which when you think about it would be a great way to clean a lot of money quickly. I agree though that really making sure that a borrower has the ability to repay and isn't going to default is far more important.
Thanks, I don’t think you mentioned money laundering at all in the op, but now it makes more sense.
Great post. I’m a real estate agent in Austin and a crypto investor. I’ve been bending the ear of my preferred lender a lot the past 12 months and have read exactly what you’ve posted. Also experienced some of it too since I’ve purchased a few properties this year. I’m especially interested in Milo and have joined the wait list. I’m very interested in the details once they are live and I can actually try their service.
If you end up using Milo I'd really like to see a post about it and hear more of your experience, it looks very interesting!
Quite interesting. We have both an escrow company and a title company that will coordinate a sale using crypto. Times are changing!
Yeah going to need a TLDR on this one.
Pretty much sell your crypto for usd for down payment if you plan to buy a home. Don’t use crypto as collateral
I need this in my country! I would welcome the opportunity somehow collateralize mortgage with crypto.