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Crypto lending platform Moon Mortgage has launched its “Crypto Mortgage”.
The move is designed to “help crypto investors physicalize their digital wealth” without the need to sell.
So if you are a bitcoin trader looking to get a taste of the real asset without giving up on the ultimate goal, this product might be for you.
It follows in the footsteps of Figma’s crypto mortgage (of the same name), which was launched in March 2022.
The difference with this product is that the minimum loan amount is $1 million. For more information, read.
How Moon Mortgage Crypto Mortgage Works
Similar to Figma’s offering, you pledge your crypto assets as collateral to buy a house.
Moon Mortgage then places a traditional lien against the property and the borrower pays a “competitive rate.”
It’s not clear what those interest rates are or what type of loan term and payments are required.
They say a good rule of thumb is to post 100% collateral, so if you need a $1 million mortgage, you’ll need to provide $1 million in crypto.
But future products may have different collateral requirements, so stay tuned.
In terms of liquidation risk, Moon Mortgage says it will not liquidate your holdings unless they fall to a “pre-agreed-to value” during the underwriting process.
You can use their crypto mortgage on either an owner occupied home or an investment property.
At the moment, their crypto mortgage product is available to home buyers in the states of Colorado, Florida, and Texas.
And it’s expected to roll out to investors in “most states across America” for investment properties at some point soon.
how to apply
While the product is live, there is currently a waiting list attend. So you have to add your name and wait.
Assuming you get a chance to apply, you’ll simply submit an online application, which they say takes about 15 minutes.
Similar to a traditional home loan, you’ll upload documents, verify properties, order an appraisal, and go through the underwriting process.
The good news is that they are familiar with crypto investors and entrepreneurs, so those who don’t have “normal jobs” may qualify.
If and when the loan closes, they store your crypto collateral with their custodian bank Anchorage Digital, which they simply refer to as Federally Chartered Crypto Bank.
Just note that crypto assets are not FDIC-insured products and can lose value.
Supported assets include Bitcoin (BTC), Ethereum (ETH) and USD Coin (USDC).
Moon Mortgage says the expected average closing time can be as little as 14 days.
Who is this loan product for?
In short, cryptocurrency holders who do not want to sell their holdings. Also known as the HODL crowd.
Moon Mortgage notes that people like him “could pay cash” if they sold their holdings.
But they don’t want to lose potential upside exposure, create taxable events, and certainly shouldn’t be referred to as “paper-handed investors.”
So it’s people who want to take advantage of real estate opportunities (or simply own a home) without parting with their bitcoin or ethereum holdings.
The company says customers can use their crypto to buy cash-flowing assets while capturing the appreciation of both the real estate and their coins.
To sum it up, they want “fellow crypto investors to be able to have their cake, eat it and” be at it.
Seems like a pretty good deal, until everything lines up. And of course, you have to weigh their rates and loan terms against conventional home loans as well.
On the moon!
(picture: nigel howe,
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