What is a Crypto Mortgage
As you can see, I am on Milocredit.com. They have just announced that they are the world’s first crypto mortgage company. Essentially what it is, is when you are utilizing your cryptocurrency as collateral versus selling that crypto for a down payment to qualify for a mortgage, typically banks require you to verify and to show where your money came from when it goes to the down payment, whether you are buying a property to live in or whether you’re seeking to invest into real estate. Banks typically require two months of bank statements, sometimes even up to twelve to 24 months, depending on the lender, depending on the type of loan.
So what does this allow you to do? This allows you to hold your crypto without having to sell it so you have the upside of it appreciating. And then this allows you to avoid going through a lousy traditional financing route. Credit, income, assets. So if you’re an entrepreneur, if you have a lot of liquidity and the crypto, this could be a phenomenal option for you. And especially for those that are non US. Citizens, it is typically impossible depending on your exact visa and other qualifications, all these different variables on if you can actually buy a property, being a non US citizen.
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So what are the main benefits?
As I highlighted a few of them, you’re utilizing your crypto wealth and avoiding going through that traditional financing option. So you may not even have to show your tax returns qualify. From a credit standpoint, they’re simply looking at, okay, this property that you’re purchasing is collateral and the crypto that you’re holding, we believe in bitcoin and if you don’t make the payments, hey, we’re going to take the property away from you. And we believe that what you’re buying it for is a fair price. So they are likely going to still do and require a pre or post appraisal to make sure the value is coming back to where it is, right. There are comparable properties in the area to compare and contrast that to. And then again, if you don’t make the payment, we’re also going to take your cryptocurrency. With this new program that Milo Crypto Mortgage is rolling out here. One of the major benefits is again for Hoddlers. Like you and I are people that have a lot of Bitcoin, let’s say.
What about income requirements?
And we’re entrepreneurs, right? We may not be showing all of our income because we have major tax advantages and incentives from the government to offset that income.
Isn’t Hard Money Lenders an option?
So we’re not getting wrecked with paying taxes the second is low bank interest rates and no high hard money rates. Here’s what they’re stating. In other words, what that means is if you’re comparing, contrasting them to let’s say a hard money lender, their interest rates are going to be what I’ve seen and what I’ve read up on are going to be right around, I think like 7% to 8%, which yeah, sure, compared to a traditional loan, around 3% right now, depending on many different factors, is high, right? It’s double. But if you look at a hard money lender, they’re charging you typically two to 3% upfront of the loan amount in fees. So for $100,000 mortgage loan, that is 2000, $3,000 of fees that you’re never going to see back, right. A loan origination fee. And then they’re also charging you typically double digit interest rates that are interest only. So in other words, the money that you’re paying them as you’re fixing up the property or you’re getting it ready for a rental or short term rental, long term rental, you name it, that interest is just flushing down the drain, right? So yes, hard money lenders can be phenomenal because they are less strict on your credit, your income, your assets, right.
But I think this is going to be potentially one of the biggest things we may ever see. And I think this is just the beginning. I think once banks figure out how to integrate this into their systems, this is going to become normal. We’re going to look back potentially on this video and laugh and say, oh yeah, well, everyone’s doing that right, in the next five to ten years. But most importantly, this allows you to 100% finance the purchase, right? So you don’t even need a down payment because again, you’re using your crypto as collateral and there’s going to be a set, I’m sure, loan the value that you can actually use. And also from a credibility standpoint, they are direct lenders. What does that mean? They are getting direct financing and access to different loan products and terms and ultimately rates to underwrite the loan from Fannie and Freddie Mac, which are directly from the government. They’re licensed or audited, they’re insured. And again, income taxes are not triggered by the transaction. So if you go to sell your crypto now to verify with traditional financing, number one, you have to liquidate that asset, which if you believe in it and you believe in appreciation, you’re basically taking that opportunity cost as a loss.
Are these mortgages taxable?
But then also you’re likely realizing some gains you’re paying short term or long term capital gains. I’m not giving you financial advice, I’m not giving you tax advice, but it’s not triggering a taxable event, right. So that alone could be saving people 2030, 40, 50% plus in taxes, which is absolutely insane when it comes to the benefits.
Can it get even better?
And last but not least, you can add or withdraw different crypto to adjust your rate. So if you say, hey, I have 100,000 in here. But you know what? I want a lower interest rate. Maybe I’ll add another fifty K a bitcoin because I don’t plan on ever selling this or I don’t plan on selling it for the next three or four years or whatever. And I want a better interest rate, higher returns on my real estate property.
How can you get a crypto mortgage?
So check it out. Milocredit.com I have zero affiliation with them and I can tell you right now that this is stuff I was thinking about years ago is man banks do not lend money on what makes sense. They simply lend money what they can fit into this box of rules. But these rules now start to expand significantly as we introduce blockchain, as we introduce crypto.
So as far as the action steps join their waitlist and then it looks like it is as simple as following these four steps apply online. You’re going to select your loan terms as far as the collateral that you have, the rate agreeing to the monthly payment, close on your loan, and then boom, you start making your payments and pay off your loan again. This is huge news. I think this is going to be really a snowball effect, right. Once they proof of concept and once banks are able to integrate this into their systems and processes and legally be able to do it, I think it’s going to be incredible to see what blockchain, what crypto does specifically in real estate. And there’s already a supply and demand issue with real estate, right? There’s 3 million underbuilt properties in the United States, and one third of the current homes for sale are new builds. So we still have at least probably a year, if not two years of supply and demand keeping up with real estate. But now we introduced more demand potentially from non US. Citizens, relatively speaking. Markets like Miami, Austin, Texas, Las Vegas, columbus, Ohio, these markets that are booming and they’re likely going to continue to boom, they’re still relatively inexpensive versus some markets around the world, right?
So, again, if those foreign investors are not comfortable or they don’t want to invest in their country, this might give them an opportunity to leverage their crypto assets to qualify for a loan in the United States, which that alone is crazy. Not to mention those that are already US. Citizens and those that aren’t are already actively buying in the US. Market. So check it out. Let me know your comments below, why you like this and or maybe why you don’t like this when it comes to leveraging your crypto to buy real estate.