100% financing of home?
Question: It sounds like the orinial poster wants the mortgage company to accept the securities as collateral. I doubt that they would. It’s hard enough to keep track of the mortgage market, let alone the stock market as well. If I were a professional mortgage lender, I’d leave the margin loans to the professionals in that arena.
Still, a margin loan from your broker is possible. How much risk are you willing to take? If the market falls enough while you still have an active margin account, your margin loan will be *adjusted*. Where will you get the money to bail yourself out?
Answer: Thanks for all the comment so far. I really don’t care about whether it’s the broker or the mortgage lender that takes my stock as collateral and lend me the downpayment on margin. My only concerns being the tax-deductibility of the margin loan. As one poster suggested, one alternative is to get a home equity loan to repay my margin loan. Suppose I use the margin loan to pay the 20% downpayment, and get a conforming mortgage for the 80%. Can I get a home equity for the 20% of the house’s value, and essentially ended up with no money down? Why doesn’t the lender just offer a 100% mortgage if this “loophole” is so common?
Regarding having the margin loan serves as the downpayment: does it affect my debt ratio and thus the mortgage amount I can borrow? I would assume not because this is a collateral-backed loan.
As for margin calls, I am not too worry about it. I have a pretty good safety cushion on the margin loan to collateral ratio , and I intend to shift a conservative and non-volatile portfolio to server as collateral. Basically I am trying to minimize selling of my security to pay for downpayment if at all possible, avoid PMI, and maximize tax deductibility of mortgage/loan interest.
Thanks again and please continue to post your advice!
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