Southern California is loaded with high net worth individuals. Many living off the income generated from investments. However, believe it or not, this can create some challenges. It’s like the Notorious B.I.G. said: it’s like the more money we come across the more problems we see. In this case, these ballers may run into trouble when trying to get a conventional mortgage. Why? They have such little taxable income that lenders may turn them down for a loan. Ouch.
Don’t sweat it though. If you’re in the same boat (likely a yacht), then I have a solution for you: an asset based mortgage. There are a few different varieties of an asset based mortgage, but the general idea is that as you deplete your assets over time to create income which pays for the mortgage.
Lenders will amortize your assets (after closing costs, down payment, and required reserves) to determine how much you can borrow. They’ll still want to see a work history and tax returns for at least 2 years as part of the process.
The upside to an asset based loan is that you don’t have to liquidate your investments in order to get a mortgage. You’ll be able to keep them and hopefully grow them over time. It’s just another type of loan that is possible while without standard income (e.g. a paycheck from an employer on the 1st and 15th).
Truss Financial Group can help you get the right asset based mortgage. Here are two types of asset based mortgages we offer.
Conventional Loan With Asset Depletion
The conventional loan is what most people think of when hearing the word ‘mortgage’. That 30-year term with monthly payments of principal and interest. Guess what? A conventional loan with asset depletion is a thing.
Qualified borrowers can get a loan up to $647,200 using the Fannie Mae Conventional Loan Model.
Down payments usually range from 3% to 5% depending on if you’re a new home buyer (3%) or subsequent buyer (5%). Your credit score will also be part of the process.
Private Client Portfolio Loan
Truss Financial Group can also help luxury home buyers with home purchases up to $20M. This is particularly helpful in Southern California, where prime real estate and mind blowing architecture often come with big price tags. Our private client portfolio loans offer lower interest rates and larger loan amounts compared to a conventional loan. Perfect for the house in Malibu, Laguna Beach, or Beverly Hills.
For this type of loan, a 20-25% down payment can be expected. While there isn’t a credit score threshold, each case is reviewed on an individual basis given the size of the loan.
If you have a significant amount of assets and use the money from those assets as income, you may want to consider an asset based mortgage. The team at Truss Financial Group is ready and waiting to help you learn more. Please contact us today.
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