Happy December to all of our AZREIA investors out there! The market sure has been interesting as we head into the end of the year. Interest rates have been on a rollercoaster with all of the back and forth with trade talks with China. There has been an uptick in non QM loan programs that I discussed couple articles back relating to investor cash flow no doc loans and bank statement self employed loans. 2020 will surely be one to watch as the uncertainty is there. Now lets touch base on some topics that have come up as of late of which I think will interest you.

Bitcoin Assets

While the cryptocurrency is becoming more mainstream by the day, it is still extremely difficult to use during a mortgage transaction due the anonymity of the asset. While it is difficult, it is still possible. Below are the requirements to utilize it as a down payment or towards closing costs in a mortgage transaction.

1. Document the original purchase in dollar value and number of coins

2. Confirm the original cryptocurrency purchases were made using eligible borrower funds

3. Document how long the cryptocurrency was held

4. Document the sale of the cryptocurrency

5. Document trail of the cryptocurrency converted into U.S. dollars and transferred to the borrower’s bank account

Refinances on the Rise

I recently read an article that discussed the record amount of untapped equity Americans have in their homes. According to the article, it is projected to be in the ballpark of $5.4 TRILLION! Many people are hesitant to draw on that equity because of the housing crash in 2008, but it is important to understand the differences between the run-up to 2008 and today.

Subprime mortgages, or mortgages for lesser qualified individuals, were rampant in the mid-2000s. Individuals were buying multiples homes utilizing mortgages with adjustable rates and balloon payments. The ease of qualifying because of these features drove the demand for homes through the roof. As soon as the “teaser” rate increased or the balloon
payment came due, the borrowers could no longer repay their mortgages and defaulted. For a great explanation of what happened, watch the movie the Big Short.

Since the crash, numerous regulations have been implemented, and borrowers are being vetted much more thoroughly. The rise in home values is being driven by high demand from qualified buyers, and historically low interest rates. While no one has a crystal ball, it seems the fundamentals of this housing market are substantially stronger than those of the past.

Now may be the time to take advantage of that equity. With interest rates still in historically low territory, there are many ways to take advantage of that equity to put yourself in a stronger financial position. Whether it is to consolidate debt or make renovations to your home, a cash-out refinance may be a great option for you.

Make sure to let us know if you have any questions. We hope to see you at the next AZREIA meeting!

by Andrew Augustyniak, Branch Manager/Loan Officer, Peoples Mortgage Company