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.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Mortgage / Finance
Groups:
San Francisco Bay Area Real Estate
Tags:
equity loans
asset based loans
asset backed loans

Spam prevention
Show All Comments
Rainmaker
693,059
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
414,912
Shannon Milligan, Richmond VA Real Estate Agent
RVA Home Team - 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
689,392
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
Ambassador
2,500,462
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
Ambassador
2,500,462
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
137,752
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
1,154,699
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
466,036
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
177,121
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
Show All Comments
Ambassador
1,115,163

Bryan Robertson

Broker, Author, Speaker
How may I help you?
*
*
*
Spam prevention

Additional Information