Home buyers can already use cryptocurrencies as collateral at some U.S. lending companies, according to reports.
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Buying a house with Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. as collateral is possible, as new cryptocurrency lending companies are entering the $2.6 trillion U.S. mortgage market, notes a report in the media outlet MarketWatch.
The media outlet reports that a start-up company called Milo began, in March this year, to offer 30-year mortgages backed by cryptocurrencies.
In such a short a trading technique in which a trader borrows an asset in order to sell it, with the expectation that the price will continue to decline. In the event that the price does decline, the short seller will then buy the asset at this lower price in order to return it to the lender of the asset, making the difference in profit. time, the company is working with more than 700 potential borrowers on pre-approvals and has granted total loans between USD $5 million to $10 million, CEO Josip Rupena said in an interview with the cited media outlet.
Different cryptocurrencies
Borrowers can use Bitcoin, Ether the form of payment used in the operation of the distribution application platform, Ethereum. o stablecoins, like USD Coin, Gemini Dollar y Terra, como garantía para un préstamo, dijo Rupena.
That’s not the only unconventional aspect of a crypto loan. Rupena says Milo will give credits for up to 100% of the purchase price if someone has enough cryptocurrencies . Someone who intends to buy a house for USD $500,000, for example, could pledge USD $500,000 in Bitcoin as a guarantee for Milo, who would then provide the cash cash is the most liquid form of money: physical coins and banknotes in the most narrow sense of the term. to close refers to the closing price; similar to the same term used in stock trading. the deal with the seller.
The rates on their 30-year mortgages range from 3.95% to 5.95% and the loan can be repaid at Milo in cryptocurrencies or dollars.
There are several companies
Explains MarketWatch Milo isn’t the only one doing that. Other startups that are offering cryptocurrency-backed mortgages include Figure y Ledn, which say they have waiting lists for loans.
Figure charges rates of 5.99% to 6.018% for 30-year fixed-rate mortgages and says borrowers can get up to $20 million in a loan. For its part, Ledn says the terms of your mortgage will be for two years, after which the loan can be renewed or repriced. He adds that rates vary.
“If you leave like USD $1 million worth of Bitcoin or Ether, we’ll give you USD $1 million in loan.” says Daniel Wallace, general manager of Figure Lending. “That means you’re not financing a loan out of pocket, there’s no down payment.”
Los bancos rarely offer financing for 100% of the purchase price. They usually require a down payment of at least 20%. However, some banks and brokerages will accept securities as collateral, potentially for up to 100% of the purchase price for low-risk borrowers.
Stresses media outlet that crypto lending can be much simpler . Milo says he can close a loan in two to three weeks, does not require a FICO credit check not a lot of documentation documentation is a part of token economies that stores all the details of an asset on the blockchain. . The company says its main requirements are verification of identity and source of funds to comply with Know Your Customer and anti-money laundering rules.
How are these credits achieved?
Due to the price volatility a statistical measure of dispersion of returns, measured by using the standard deviation or variance between returns from that same security or market index. of crypto, financing 100% of a home purchase in cryptocurrencies might sound risky for any lender, however these crypto lenders say they can make it work essentially using both the digital digital technologies are these electronic tools that have the ability to generate, store or even process data. asset and the value of the home as collateral for the loan.
“We take the house as collateral collateral is any asset that a lender accepts as a form of security to ensure that the borrower repays a loan. and cryptocurrencies as collateral.” dice Wallace. “If the market an area or arena, online or offline, in which commercial dealings are conducted. price of crypto falls below a certain threshold, Figure may require the borrower to post more collateral or may automatically liquidate the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. to make loan payments.” He adds:
“We would have two assets on our books, USD 1 million in cryptocurrencies and a house. We can automatically liquidate the Bitcoin to make mortgage payments, taxes, insurance, if necessary.”
Rupena says the collateral would have to fall 65% in value before the company would require more collateral or a loan modification.
“In a typical real estate transaction, it backs the borrower, and if they miss payments, their first line of defense is foreclosure.” dice. “With this, there is a liquid asset: crypto. It’s volatile, but the levels we’re asking for would support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. a significant drawdown.”
Buyers increase
Demand for cryptocurrency-backed mortgages may be on the rise. According to a recent survey byRedfin,alrededor del 12 % de los compradores de vivienda por primera vez dijeron que habían vendido algo de criptomonedas para un pago inicial en el cuarto trimestre de 2021. That was an increase of 8.8 percent in the third quarter of 2020 and 4.6 percent in the third quarter of 2019, saidRedfin.
Borrowers may have several reasons for offering cryptocurrencies as collateral. They may be sitting on capital capital is most commonly defined as the large sum of money you would use to invest. gains and should be taxed on a sale. They may be betting on price gains gains refer to an increase in value or profit. and do not want to withdraw money to finance a mortgage. . And your cryptocurrency may not be useful for qualifying for a mortgage with a bank or other traditional lender.
Currently, lending in general is under pressure now due to an increase in rates, recently reaching 5%. This is how l rypto loans are trying to break into a currently difficult market. However, while they may be attractive to some borrowers, they don’t appear to offer better rates than conventional financing.
Says the outlet that one of the reasons crypto loans have higher rates is that they can’t be sold atFannie Mae o Freddie Mac,
Fannie Mae y Freddie Mac, which are the large companies that guarantee most of the mortgages made in the U.S. These government agencies have strict underwriting standards for “conforming” loans. They buy the vast majority of mortgages and then package them into mortgage-backed securities.
Still, these may be the initial rounds of a merger between crypto and traditional mortgage financing. Figure already made a deal with private equity equity is the funds that would be returned to a company's shareholders if all of the company's assets were dissolved and all debts were paid off in the event of liquidation. firm Apollo Global Management selling to the firm a package of mortgages”. eNote” and transferring the ownership of the notes through a Blockchain.
“We believe there is a market for securitization of crypto loans.” says Rupena, who started Milo to provide mortgages to non-U.S. citizens living in the United States.
In addition, as he said DiarioBitcoin, there are many who are not looking for loans, but to buy in cash homes with cryptocurrencies And this phenomenon is not unique to the United States. In countries like Mexico In Chile, Argentina, Venezuela or Colombia there have already been purchases of homes with crypto, in direct deals with the real estate or the owner of the property.
Sources: MarketWatch ,Redfin,archivo
Version of DiarioBitcoin
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