Make sure you talk to a trusted financial planner for your specific financial goals.
One genius way to beat the mortgage rates right now is using your stock portfolio, cash on hand or savings in an investment product called a SBL- SECURITIES BASED LENDING, OR A PCL investment product. Its like a HLOC or a line of credit based on your cash that you use as a collateral. Instead of paying all your cash for a home, you should look into this type of option.
Your money will be working for you in the market which has a better return on investment than it would if you put that same amount of cash into a house. The average rate of return can average much higher and the gains on your investment pretty much can pay for itself.
TIP: You should always consider at least 3 different home mortgage lenders when you are starting the pre-approval process. This is one route that's often forgotten when applying for a home loan. Don't forget to check with your investment bank, local branch, or who you have your 401K with , they may be able offer you this and provide you with a discounted interest rate quote for a home loan. If you are a veteran, make sure you are aware of your military entitlements as well!
Securities-based lending (SBL) is a financial strategy where borrowers use their investment portfolio, such as stocks, bonds, or mutual funds, and cash as collateral to secure a loan. While SBL can provide liquidity without the need to sell investments, it’s important to understand the implications and risks involved:
1. Potential for lower interest rates: SBL loans may offer lower interest rates compared to traditional mortgages because they are collateralized by investment assets. The interest rate is often tied to an index, such as LIBOR, and can vary depending on the lender and the specific terms of the loan.
2. Flexibility in loan terms: SBL loans may offer more flexibility in terms of repayment schedules and loan structures. Borrowers can often choose interest-only payments or customized repayment plans based on their financial situation.
3. Preservation of investment portfolio: By using an SBL loan, borrowers can retain ownership of their investment portfolio while accessing funds for other purposes, such as purchasing a home. This can be beneficial if the investments are expected to generate higher returns over time.
4. Potential risks: It’s important to consider the risks associated with SBL. If the value of the collateralized investments declines significantly, borrowers may be required to provide additional collateral or repay the loan in full. Failure to meet the terms of the loan agreement could result in the lender liquidating the investments to recover their funds. There are many different types of these financial products so ask your advisor which one is best for your situation.
5. Eligibility and qualification: SBL loans are typically available to individuals with substantial investment portfolios. Lenders consider factors such as the value and liquidity of the investments, the borrower’s creditworthiness, and their ability to meet the loan obligations. Applying for this usually wont hurt your credit score and the cost of the loan could be offset by losses or gains in the market costing you less money overall than a typical mortgage would.
6. Consider professional advice: Given the complexities and risks involved with securities-based lending, it’s highly recommended to consult with a financial advisor or wealth management professional who specializes in this area. They can help evaluate your specific situation, explain the terms and risks associated with SBL, and guide you in making an informed decision. (I met my financial advisor, Gilbert Rodriguez, 832-577-7619, he's with Wells Fargo advisors in the Houston area and can be met at a branch in West U, or Montrose 5202 Kirby or 2651 Kipling (inside the Hanover Building) Give him a call!
It’s important to conduct thorough research, review loan terms carefully, and consider your financial goals and risk tolerance before pursuing securities-based lending as a strategy for obtaining a mortgage loan. For more ways to beat the interest rate, or more Home Buying Guides, follow me on Pinterest, Instagram and now Tiktok! Aubrie
