Mortgage Loans
Complete 1 form and get up to 5 free quotes:
Mortgage Type:
State:
Local Mortgage Information for Your Area
Mortgage Tools
Search Articles
Related Topics
100 mortgage refinance
alternative financing
average mortgage rate
buy a condo
buy foreclosed house
What is a Pledged-Asset Mortgage?
Instead of making a traditional down payment, a pledged-asset mortgage allows borrowers to use assets to completely finance a home. These assets can include stocks, bonds, mutual funds, and certificates of deposit.
  • advantages: Since the loan is financed 100 percent, there is no need for private mortgage insurance.

    Likewise, since there is no down payment, the borrower does not have to part with cash, or have to liquify assets (not to mention paying the capital gains taxes that often accompany them).

    These loans are most appropriate for folks who have high net worth, better than average income and good credit. It allows them the flexibility of having their "Down Payment" invested in stocks bonds or other assets while still being able to buy the house.

  • disadvantages: The most obvious disadvantage is that if there is any default, the borrower can lose their assets as well as the house.

    Furthermore, if the home's value falls below the original amount, the lender can "call" on the difference-requiring the borrower to have to immediately pay the difference, or risk losing assets.

Next: Do you want to learn more about where to get a mortgage or would you like to be matched with up to five mortgage lenders?
 
 
The content provided above (the "Content") is supplied in good faith using references and sources deemed reliable, however it is published strictly on an "as-is" basis. Nextag, Inc., on behalf of itself and its affiliates hereby disclaims any and all express or implied warranties to the maximum extent permitted by law. Despite our good faith efforts we cannot provide any assurance that the Content is accurate or error free, or up to date. We disclaim any obligation to update the Content. The Content is provided for informational purposes only and is not to be construed as financial or legal advice. Everyone's financial circumstances are unique. You are urged to consult multiple informational sources and a professional advisor before making any decisions affecting your personal finances. For more information please consult our website Terms of Use which also apply.