Milo Credit, a Miami-based company, offers Bitcoin-backed mortgages to allow consumers to buy homes without trading their coins.
The sale of cryptocurrency for fiat currency is a taxable event in the United States, as in most other countries.
This means that any gain or loss realized since purchase is taxed at the time of sale, as required by the relevant government. If the crypto holder made a profit on the sale, the tax liability could be substantial.
Users must own the property value
According to reports, a Florida man named Vincent Burniske received a “30-year fixed rate mortgage backed by a portion of his Bitcoin and Ethereum assets.”
Milo Credit’s mortgage promises to allow homeowners to “leverage your cryptocurrency to invest in real estate.” Our plan is similar to yours – keep HODLing.
Rates are as low as 3.95%, according to its website, with the cryptocurrency held by Gemini and Coinbase.
The crypto mortgage offer has a maximum loan amount of $5 million, but it requires that at least 100% of the cryptocurrency loan value be secured by the loan.
Unlike standard mortgages, which can go down as low as 3.5% of the loan value, this crypto mortgage requires you to hold the full value of the property you are acquiring in cryptocurrency.
The cryptocurrency is then housed in separate sub-accounts with Gemini and Coinbase to ensure that all coins are kept separate.
No credit score required
However, Milo Credit does not require a FICO credit score to obtain a mortgage. The value of the cryptocurrency is considered sufficient to guarantee solvency.
These fine print could be devastating for many people struggling to get on the property ladder.
6ix9ine made a video showing how you can be rich without being considered eligible for a mortgage in today’s culture.
He later revealed that the money in the video was a hoax, but the message still resonates with many alternative investors and gig economy workers.
To be allowed to take out a mortgage, the self-employed must first clear a series of hurdles. Most mortgages require you to have a good credit score.
However, having a decent credit score is not the only requirement; you might also be denied if you don’t have one.
Should users be worried about anything?
A standard mortgage can cause problems if the housing market drops, causing you to lose the equity in your home.
This is the situation where you owe more than your home is worth. If you have a $100,000 mortgage on a $120,000 house and the housing market drops 20%, your house is worth $96,000 but you still owe $100,000.
In other situations, the bank may ask for additional guarantees or, in the worst case, seize your house.
Hundreds of thousands of homes were foreclosed in the 2008 mortgage crisis.
With a crypto mortgage, on the other hand, you can rely on the price of Bitcoin to secure your home.
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