No Money Down Mortgages Are Back

by James Hendrickson on February 3, 2013 · 2 comments

mortgage, no money down, real estate

Hi All,

Its the return of the no money down mortgage.  The basic idea is that you can get a no money down mortgage if you have significant financial assets you are willing to put down as collateral, including stocks or bonds.  The catch is, banks offering this mortgage want you to pledge both the house and your collateral.

The story is at Marketwatch:

Some affluent buyers are getting the keys to their new home without putting a penny down.

It’s 100% financing—the same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: They’re almost exclusively being offered to clients with sizable assets, and they often require two forms of collateral—the house and a portion of the client’s investment portfolio in lieu of a traditional cash down payment.

In most cases, borrowers end up with one loan and one monthly payment. Depending on the lender and the borrower, roughly 60% to 80% of the loan can be pegged to the home’s value while the remaining 20% to 40% can be secured by investments. On a $2 million primary residence, for instance, the borrower could get a $2 million loan, which would require a pledge of assets in an investment portfolio to cover what could have been, say, a $500,000 down payment. The pledged assets can remain fully invested, earning returns as normal, without disrupting the client’s investment goals.

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{ 2 comments… read them below or add one }

1 KC @ genxfinance February 3, 2013 at 8:05 pm

Hey, If you are confident you can pay ’em, why not? I can really be convenient. But still, think about it over and over and over again first..

2 James February 4, 2013 at 11:09 pm

KC – I’m of the same mind.

James

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