Who Offers Asset Based Mortgages? Quick Answer

Are you looking for Who Offers Asset Based Mortgages? In the realm of real estate investment, securing financing can be a hurdle, especially for those lacking a strong credit history or substantial net worth. Asset based mortgages emerge as a beacon of hope, offering a pathway to loan approval based on the value of the underlying property. This approach pivots from traditional lending, focusing less on credit scores and more on the asset itself.

Key Takeaways

• Asset-based mortgages cater to those with significant assets but potentially irregular income.
• Top lenders include Stratton Equities, Titan Funding, and CoreVest Finance.
• These loans are secured against the asset, often with higher interest rates due to the increased risk.
• Ideal for fix-and-flips, large-scale investments, or borrowers unable to secure traditional financing.

Who Offers Asset Based Mortgages?

Asset-based mortgages, also known as asset depletion loans, are offered by a variety of lenders who specialize in non-conventional mortgage programs. These lenders provide innovative solutions for borrowers who have significant liquid assets but may not have a traditional income source. Some of the lenders known for offering asset-based mortgages include:

• First National Bank of America: They offer asset depletion loans by considering the total liquid asset balance of the borrower to determine the loan amount.
• First Savings Mortgage: This lender provides asset-based loans using a calculation that divides the borrower’s liquid assets by a certain number of months to establish a monthly income figure for loan qualification.
• Citadel Servicing: Known for offering non-QM loans, Citadel Servicing provides asset-based mortgages among other loan products.
• ACC Mortgage: They specialize in non-traditional loans, including asset depletion loans, catering to a diverse range of borrowing needs.

For individuals with substantial liquid assets, these lenders can use a formula to calculate a monthly income equivalent based on asset depletion over time, which helps in qualifying for a mortgage.

Each lender has its own set of guidelines, requirements, and calculations, so it’s advisable to consult with them directly or seek the assistance of a mortgage professional to find the best fit for your financial situation.

The Top Asset-Based Lenders for Real Estate

When it comes to asset-based lending, a few names stand out. Stratton Equities, for instance, offers a comprehensive suite of loans, including hard money loans and no-doc mortgage loans, catering to a wide range of needs.

Titan Funding provides up to 100% LTV for certain loans, demonstrating remarkable flexibility. CoreVest Finance has financed over 140,000 units, showcasing their vast experience and reliability in the market.

Stratton Equities: A Leader in Diverse Loan Options

Stratton Equities is renowned for its diverse loan offerings, which include fix and flip loans, cash-out refinance loans, and even foreclosure bailout loans. They boast a quick funding turnaround and are willing to lend up to 80% LTV in certain cases.

Titan Funding: Maximizing Loan-to-Value Ratios

Titan Funding stands out with its willingness to offer up to 100% LTV through cross-collateralization. Their mortgage programs are designed to be flexible, accommodating a range of investment strategies including fixes flips and long-term holds.

CoreVest Finance: A National Footprint in Asset-Based Lending

CoreVest Finance’s national presence and extensive loan portfolio speak volumes about their expertise. With loan amounts ranging from $75,000 to $50 million, they serve a broad spectrum of investment needs and offer non-recourse loans, adding an extra layer of security for borrowers.

Understanding Asset-Based Loans

Asset-based loans are distinct in their approach to lending. They prioritize the asset’s value over the borrower’s creditworthiness, making them a strategic option for those with valuable properties but perhaps less-than-perfect financial histories.

The Criteria for Asset-Based Lending

The criteria for asset-based loans can vary among lenders, but common factors include the property’s value, the borrower’s experience, and the investment’s potential profitability. Lenders may offer LTV ratios from 70% to 100%, with terms and interest rates reflecting the risk level of the loan.

The Appeal of Asset-Based Mortgages

The appeal of asset-based mortgages lies in their accessibility. They open doors for investors who might otherwise be locked out of the real estate market due to traditional lending barriers. With the right property and a solid investment plan, these loans can be a game-changer.

Asset Based Mortgages: A Deeper Dive

Asset based mortgages continue to redefine the borrowing landscape, offering a lifeline to those whose financial profiles don’t align with conventional lending standards. This segment of the mortgage industry is witnessing a surge in popularity as savvy investors leverage their assets to unlock financial opportunities.

The Mechanics of Asset-Based Mortgage Approval

Understanding the inner workings of asset-based mortgage approval is crucial for potential borrowers. Lenders typically focus on the value and income-generating potential of the property in question. They meticulously assess the asset’s ability to cover the loan payments, often requiring a professional appraisal to ensure the property’s value is sufficient to secure the loan.

The Appraisal Process

The appraisal process in asset-based lending is a critical step. It determines the fair market value of the property, which in turn influences the loan amount a lender is willing to offer. This process is typically more rigorous than traditional appraisals, as the loan is heavily reliant on the property’s actual worth.

Loan-to-Value Considerations

Loan-to-Value (LTV) ratios in asset-based mortgages can be more generous, sometimes reaching up to 90% for premium properties. However, the exact LTV will depend on the lender’s risk assessment and the borrower’s ability to provide additional collateral if needed.

The Strategic Use of Asset-Based Mortgages

Investors often use asset-based mortgages as a strategic tool to expand their portfolios. These loans can be particularly useful for acquiring investment properties that can generate rental income or for purchasing properties to renovate and sell at a profit.

Leveraging Assets for Expansion

By leveraging existing assets, investors can amplify their market presence without the immediate need for liquid capital. This strategy can be especially beneficial for those looking to scale their operations quickly in a competitive market.

Renovation and Flip Projects

For renovation and flip projects, asset-based mortgages offer the flexibility and speed of funding that is essential for success. Investors can secure financing based on the after-repair value of the property, providing them with the capital needed to make improvements and sell for a higher price.

The Risks and Rewards of Asset-Based Lending

While asset-based mortgages can open many doors, they also come with inherent risks. Borrowers must be cognizant of the terms and conditions of these loans, as they often carry higher interest rates and may have more stringent repayment schedules.

Navigating Interest Rates

Interest rates for asset-based loans are typically higher than those for conventional mortgages. This reflects the increased risk that lenders take on by focusing on the asset’s value over the borrower’s creditworthiness.

Repayment Strategies

Successful borrowers often have a clear exit strategy to manage the repayment of an asset-based loan. Whether it’s through the sale of the property or refinancing under more favorable terms, having a plan in place is essential to avoid financial strain.

Can I Get A Mortgage Based On My Assets?

Yes, you can get a mortgage based on your assets. This type of loan, known as an asset-based mortgage, allows borrowers to qualify for a mortgage using their liquid assets instead of traditional income.

This is particularly beneficial for retirees, entrepreneurs, or investors who have significant assets but may not have a steady income stream that traditional lenders typically require.

Lenders will assess your liquid assets, such as savings, investments, and other readily convertible to cash resources, to create an income stream that can be used to qualify for the loan. The assets are amortized over the term of the loan, providing a method for lenders to gauge your ability to afford the mortgage payments.

Do Banks Do Asset Based Loans?

Banks do offer asset-based loans, which are typically used by businesses to obtain financing based on the value of the assets held by the company. These assets can include accounts receivable, inventory, equipment, and other property that can be leveraged for loan collateral.

While asset-based loans are more commonly associated with business lending, some banks also offer asset-based mortgages for individual borrowers. These loans are particularly useful for high-net-worth individuals who need to borrow against their assets to finance large purchases like real estate.

The terms and availability of such loans can vary widely between banks, and they often require a thorough financial review and asset appraisal.

Who Uses Asset-Based Lending?

Asset-based lending is primarily utilized by small to mid-sized businesses that require loans or lines of credit to meet short-term cash flow demands. This form of lending is particularly advantageous for businesses that may not have sufficient cash flow or cash assets to cover a loan but possess physical assets that can be used as collateral.

Examples include new businesses like restaurants that might use their equipment as collateral to secure necessary funding. Larger corporations may also turn to asset-based loans for short-term needs, especially when the cost and time associated with issuing shares or bonds are prohibitive.

The flexibility of asset-based lending makes it a strategic option for companies facing time-sensitive financial needs such as major acquisitions or unexpected equipment purchases.

How Do You Qualify For An Asset-Based Loan?

To qualify for an asset-based loan, a company must have valuable physical assets that can be pledged as collateral. These assets can include inventory, accounts receivable, equipment, or other property.

The lender will appraise these assets to determine their fair market value and decide on the loan amount that can be offered. The terms and conditions of the loan will depend on the type and value of the assets, with lenders preferring highly liquid collateral such as securities that can be easily converted to cash.

Companies seeking asset-based loans must also demonstrate a stable business operation and may be subject to a credit history review. Interest rates for these loans are generally lower than unsecured loans due to the security the collateral provides, which minimizes the lender’s risk in the event of a default.

Conclusion

Asset-based mortgages are a powerful tool for real estate investors, offering flexibility and accessibility that traditional loans cannot match. Lenders like Stratton Equities, Titan Funding, and CoreVest Finance are at the forefront of this lending revolution, providing innovative solutions that cater to a diverse range of investment strategies. As the market evolves, these asset based mortgages continue to empower investors, fueling the growth and dynamism of the real estate sector.

Frequently Asked Questions