In the last few years, cryptocurrency has grown in popularity and is becoming mainstream. Previously, people were wary of investing in crypto or even researching the concept any further because it is new. Thankfully, cryptocurrency has continued to prove itself as a viable alternative to traditional currency around the world.

At Your Home Sold Guaranteed Realty - Barb Has the Buyers Team, Barb and her real estate team have seen the potential in cryptocurrency, especially in the real estate industry. Years ago, no one would have believed that you can buy just about anything with a type of money that is not our traditional currency. Now, as crazy as it may seem, you can obtain a mortgage with cryptocurrency!

Crypto-Backed Mortgaged Are an Option for Home Buyers in Colorado Springs

You read that correctly. You can use cryptocurrency, if you have invested in it, to buy or sell a home in Colorado Springs! This is a viable and legitimate option for those who have the right information, resources, and assets. Our real estate experts at Your Home Sold Guaranteed Realty - Barb Has the Buyers Team are here to ensure that you have the tools and knowledge you need to ensure you can buy a home successfully with this new form of currency.

While individuals and companies were previously concerned about the viability of cryptocurrency, more people and, most important of all, lenders have become much more open to the potential of cryptocurrency. This includes obtaining a mortgage with cryptocurrency as collateral. 

What Is the Process for Getting a Mortgage with Cryptocurrency?

If you have ever gotten a loan for any other major purchase using traditional currency, you will have a general idea of the steps in the process. Using cryptocurrency, including the well-known ones such as Bitcoin and Ethereum, to get a mortgage will follow similar steps. To begin, the lender will assess the value of your cryptocurrency in order to determine a loan-to-value ratio. Basically, they need to establish the amount of the loan when compared to the value of the collateral to make sure it is a sound transaction. 

Once this evaluation has been completed, you will pledge your cryptocurrency as collateral for the mortgage, and you may be required to place the crypto in an escrow account. Remember, the lender you work with may not be willing to accept all forms of cryptocurrency because they may not be familiar with less-known ones or their risk profiles.  

It is important to keep in mind that crypto is a relatively new financial tool, and getting a mortgage with cryptocurrency is an ever-evolving process. There may be new and specific requirements or process stages that various lenders will have in order to proceed with the loan. Additionally, as the industry develops, things can continue to change, so it is vital that you stay up-to-date on changes and options. Be sure you fully comprehend the terms and conditions of the mortgage agreement.

The Benefits of Putting up Cryptocurrency as Collateral for Your Mortgage

When you utilize cryptocurrency as collateral for your mortgage, there are a variety of benefits that you may be unaware of. Some of these advantages include:

• The potential for lower interest rates due to the fact that cryptocurrency is a valuable and highly liquid asset. This will encourage lenders to offer lower interest rates for crypto users resulting in serious savings over the life of your mortgage.
• Using cryptocurrency may also result in quicker loan approval because the value of crypto can be verified on a public ledger. Lenders are able to assess the value of the crypto-collateral quickly and potentially approve the loan. When deals move fast in a competitive market, obtaining a mortgage with cryptocurrency as collateral can give you a clear advantage.
• When you use cryptocurrency as collateral, you do not have to sell it and you also don’t have to pay taxes on a potential sale. The increase in its value in the future will also be a benefit for you.
• Lastly, crypto-backed mortgages have a lower risk of foreclosure (should something drastic occur) because lenders have other options in these cases

These advantages are quite attractive, and our team at Your Home Sold Guaranteed Realty - Barb Has the Buyers Team can give you more information about all of them, if you have any questions.

The Drawbacks of Getting a Mortgage with Cryptocurrency 

As with just about everything, there are a few drawbacks of obtaining a mortgage with cryptocurrency that you should be aware of before you make the leap. These include:

• The volatility of cryptocurrency prices creates a bit of uncertainty for lenders and borrowers because the value of crypto can fluctuate significantly and rapidly. This may lead to the overcollateralization of the cryptocurrency in order to reduce the chances of default.
• Another disadvantage of using crypto for your loan is due to the limited numbers of lenders who will accept crypto as a form of collateral. Though the popularity of crypto is increasing, lenders have still not widely accepted it. That is why it is important to have an experienced realtor who can find you the right lender willing to accept your cryptocurrency.
• A final drawback is the existence of complicated legal and regulatory issues, especially concerning the legal status of cryptocurrency because it varies by jurisdiction. Using cryptocurrency as collateral for a real estate transaction can bring about several legal questions that will need to be answered by legal experts. 

It is vital that you seek out experienced professionals with whom you can discuss these drawbacks before you begin the real estate process. Getting legal and financial guidance will be critical to ensure your continued success.

Has Anyone Ever Gotten a Mortgage with Cryptocurrency?

If you are worried about being the first person to get a mortgage with cryptocurrency, fear not. There are several examples of crypto-backed mortgages that have set a precedent for you. One example is a New York-based startup that secured a mortgage for a commercial property using Bitcoin as collateral. Using cryptocurrency, the company obtained a great interest rate and quick loan approval. 

In California, a person was able to use Bitcoin and Ethereum as collateral to buy a home, securing a lower interest rate and shorter loan approval time than others who used traditional currency to secure a loan. 

Even though cryptocurrency, crypto-backed loans, and DeFi (decentralized finance) are all relatively new concepts, these types of cases will continue to rise over time. You should always be very cautious when making a financial decision which includes cryptocurrency and to get sound legal and financial advice from experienced professionals who have your best interests in mind. Remember, this blog is not meant to provide advice in any way – we just want to give you some educational information. 

Ready to Invest in Real Estate? Ask Barb How to Get a Mortgage with Cryptocurrency 

If you are looking to buy a home or piece of real estate in Colorado Springs, CO, you may not have even thought about using cryptocurrency as collateral, but it is a real possibility. Whether you are a first-time buyer or you have gone through the process several times, you may want to consider utilizing your digital assets for a real estate investment. 

At Your Home Sold Guaranteed Realty - Barb Has the Buyers Team, Barb and her team have the experience, skills, and knowledge to help guide and advise you through the home buying process. We can also give you the information you need concerning the use of cryptocurrency to get a mortgage. And we are happy to offer you this information for FREE because Barb is the best realtor in Colorado Springs!

Our team is here to help you find the home you have always dreamed of and ensure that you get the best financing rates and quickest loan approval. We have dealt with all types of financing (crypto, cash, traditional currency), and our real estate team will gladly provide you with all the assistance you need to achieve your real estate goals. 

Call Barb today at 719-301-1802 or fill out the form below with the requested information, and one of our realtors will send you a detailed response. We look forward to hearing from you and can’t wait to get you started on your real estate journey!