Should I buy a home with an asset-based loan?

By
Real Estate Broker/Owner with Catarra Real Estate, Inc CA BRE #01191946

For people who have a lot of equity in other assets such as stocks or collectibles, borrowing against the value of those assets might be a good way to go to finance the purchase of a home.  There are several major considerations with asset-backed loans.  The primary one is leverage. 

The idea of an asset-backed loan is that you have one or more assets with a value sufficient to borrow against for buying a home.  You get a small portion of the value of those assets which is borrowed at a rate higher than typical loan rates.  The lender has the right to liquidate the assets should you default on the loan.  Why would you do all this?

Here are some reasons for using an asset-based loan to buy a home:

  • You hold stocks or other investments that have lost value but could recover in the future
  • You hold stock that could be sold in the future (e.g. pre-IPO)
  • You have a collection of artwork or other collectibles you don't want to sell

Any of these reasons is good enough to use this tactic.  You could even have other real estate investments that lost value but could recover in the future.  Borrowing against those has both leveage and tax advantages.  Consult your tax advisor for insights into what strategy is best to pursue.

I can recommend people who have experience in arranging asset-based loans.  If this sounds like something you would be interested in discussing prior to buying a home, call me and I will refer you to well-qualified advisors on how these loans work.

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equity loans
asset based loans
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Show All Comments
Rainmaker
654,298
Laura Allen, Lake Tahoe - Truckee Real Estate for Sale www.TahoeLauraLuxuryHomes.com
Coldwell Banker, Tahoe City, CA (530) 414-1260 - Tahoe City, CA
Tahoe Real Estate Agent Helping Buyers and Sellers

Bryan - This is a great way for buyers to go that have stocks, bonds, or other assets that they don't want to sell right now, but if they were liquidated would give them the cash to buy real estate.  Excellent information for buyers to have!

Sep 29, 2012 04:45 PM #1
Rainmaker
382,577
Shannon Milligan, Richmond VA Real Estate Agent
RVA Home Team with Jefferson Properties - Richmond, VA
RVA Home Team - Winning with Integrity.

Great information many may not think about when deciding on purchasing a home. Anyone looking to buy a Los Altos home for sale with an asset based loan would be wise to call you!

Sep 29, 2012 06:24 PM #2
Rainmaker
625,055
Sussie Sutton
UTR Texas Realtors - Pearland, TX
UTR TEXAS Realtors - Rep for buyers and sellers.

I think this is a great idea and I am not ashamed to say I have never had experience in this type of loan. I will however learn it and implement it in the future. Thanks for this little tidbit.

Sep 29, 2012 06:48 PM #3
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Bryan, what a great idea!  It seems like we learn something new every day arounnd here.

Sep 29, 2012 07:08 PM #4
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Hey, Bryan, I included this post in Last Week's Favorites.  Have a great week!

Sep 30, 2012 05:38 PM #5
Rainmaker
126,144
Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

Great piece of information, explained very well.

Sep 30, 2012 06:57 PM #6
Rainmaker
1,086,870
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Bryan, great share..I have a buyer doing this now but wasn't familiar with it until i talked to their lender...very timely.

Oct 01, 2012 03:42 AM #7
Rainmaker
449,700
Gay E. Rosen
Houlihan Lawrence - Larchmont, NY
Honest, Hardworking and always Professional!

Bryan - really interesting.. I am going to ask our local mortgage person about this and see how it is handled.. great post.

Oct 01, 2012 06:14 AM #8
Rainmaker
173,061
Phil Caulfield
Opes Advisors - San Mateo, CA
Mortgage Lender - San Francisco Bay Area

Hi Bryan - this strategy is a great way to maximize your mortgage interest deduction if the lender securitizes the house in addition to the other assets!

Oct 01, 2012 11:11 AM #9
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Bryan Robertson

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