Unlike the traditional 9-to-5 job with a paycheck every two weeks and a regular paycheck, more Americans than ever are in a unique financial position. A startup founder that sells off the company for six to eight figures, an entrepreneur who takes dividends but no salary, and a newly retired CEO find themselves in similar situations – plenty of assets but no active income. If you’re in a place like that, you could find that a traditional home loan is tougher to achieve than for a blue-collar worker. A conventional mortgage typically requires proof of a regular paycheck and steady income, which you may not have. As a result, you may have difficulty qualifying for a conventional mortgage due to your unique financial situation.
At MBANC, we’re intent on securing the mortgage you deserve. Put your assets to use in getting approved for a mortgage loan you deserve with asset utilization. Here’s what it’s all about
What is an Asset Utilization Loan?
When you’re applying for a mortgage at your typical bank or mortgage lender, they require pay stubs and tax returns along with other documents like identity verification and bank statements. It’s a typical part of the process. But if you don’t have the income on paper to support a mortgage, traditional income verification focuses on employment income and regular paychecks, which may not reflect your true financial capacity. As a result, you could be walking away with a rejection letter rather than buying a home. Many borrowers have difficulty qualifying for conventional loans due to non-traditional income sources.
Asset Utilization is a process that allows MBANC to work with non-traditional mortgage applicants to approve a purchase or get a mortgage on a higher value than would be possible otherwise. This program opens new opportunities by allowing borrowers to qualify for a mortgage using their assets to qualify, rather than relying solely on employment income. An underwriter looks at an asset profile that would typically be outside of the FHA loan qualifications. The application process evaluates eligible assets, such as liquid assets and significant savings, as easily quantifiable sources of qualifying income. The underwriter then calculates monthly mortgage payment serviceability based on interest earned on assets. Additionally, the underwriter will calculate the borrower’s monthly income by dividing the total value of their assets over a set period, ensuring the borrower’s ability to repay.
For example, an applicant with $10 million in total assets but no verifiable and consistent income may be looking to make payments over a number of years – commonly 15 years or 30 years. Using a predetermined formula, the underwriter calculates an average invested return on assets to come up with an asset utilization ratio. Asset based mortgages and asset utilization loans allow borrowers to leverage significant assets and investment portfolios to qualify for larger loan amounts. From there, it’s determined the home price that can be financed with this unique class of mortgage. This approach does not require traditional income verification and is ideal for non-traditional borrowers who may not qualify for conventional loans.
What qualifies as an asset?
If you have something of substantial and verifiable value, such as personal assets—including accounts stocks and investment accounts—that is either liquid or can be liquidated quickly, it can be considered an asset for borrowing money in this type of mortgage. A few of the potential asset types include:
- Stocks and bonds
- Investment accounts
- Investment portfolios
- Investments
- Retirement accounts such as 401K and IRAs.
- Trust funds
- Hedge fund portfolios
- Checking accounts, savings accounts, and accounts stocks balances
- Money market accounts and CDs
- Mutual funds
- Some insurance policy cash-out values
Who does an Asset Utilization Mortgage work for?
High-net-worth borrowers can benefit from an asset utilization mortgage, and there’s no restriction on the individual’s profile to seek out this type of product. High-net-worth individuals, self employed individuals, and non traditional borrowers—such as retirees, investors, and entrepreneurs—are especially well-suited for these loans, as they can leverage their assets rather than traditional income to qualify. The typical loan amount is likely to be in the jumbo loan category that’s well outside of the Fannie Mae and Freddie Mac criteria. It’s a great solution for retired individuals sitting on a healthy nest egg, self-employed borrowers, entrepreneurs, and C-suite borrowers who don’t take a regular salary, among others. The benefits of this program include access to specialized financing for investment properties and other unique needs, making it ideal for borrowers seeking flexible mortgage solutions.
Asset utilization mortgages are flexible with either fixed rate or adjustable rate mortgage options. Credit score requirements and LTV ratios are accommodating for a wide range of borrowers. Qualified borrowers can access larger loans and more flexible financing options through this program, allowing them to meet their specific financial goals.
MBANC is your source for Asset Utilization Mortgages
Are you looking for a mortgage that fits your unique profile and financial portfolio? That’s where MBANC specializes. Our products are tailored for high-net-worth individuals, non-traditional income earners, and self-employed borrowers.
You’ve worked hard to get where you are. Contact us today to get pre-approved for the mortgage you deserve today.