Asset-Based Loans & Mortgages
An asset-based loan or asset utilization loan uses assets as income. Whether you are a retiree with a small fixed income, a new business or an established company that needs to maintain a high cash flow, the ease and benefits of asset-based loans and mortgages have made them a popular solution for borrowers in recent years.
- Qualified based on verified liquid assets
- Loan amounts up to $3 million
- Minimum 620 credit score
- No employment or income (Ability-to-Repay (ATR) is determined by assets and may be used in combination with bank statements in some cases if assets alone do not suffice)
- No tax return or 4506T required
- Debt to Income (DTI) Ratio not calculated (in most cases)
- Interest Only available
- As little as 20% down payment
- Cash out allowed
Griffin Funding takes a common-sense approach to underwriting asset-based loans for a painless application process.
With an asset-based loan agreement, also known as an asset depletion loan, borrowers are granted a loan based on their assets. An asset-based loan or mortgage allows you to utilize the assets you have already invested in to secure the cash you need now.
Asset utilization loans are perfect for retirees, investors, and/or self-employed borrowers that have assets on-hand.
How does an Asset-Based Loan Work?
With this type of lending, you will be borrowing against your assets. The amount you are granted for your loan, known as the borrowing base, will be established based on a percentage of the assets’ value.
For your asset-based mortgage, you can use 70% of what you have in retirement and investment accounts and 100% of liquid assets, the value of your bank accounts.
The borrowing base and loan terms will be determined by the lender.
Calculating Your Asset-Based Loan
To calculate the qualifying amount of your asset-based loan, you will need to determine your maximum monthly loan payment. First, you need to calculate the total value of your available assets. Then, divide the total by either 5 years, 7 years or 10 years depending on the asset-based loan program.
For example, you may have $600,000 in liquid verifiable assets and your total mortgage payment is $10,000 per month. Since you have 60 months’ worth of assets you would qualify and meet the ability to repay requirements.
Benefits of an Asset-Based Financing
As with any type of borrowing, there are pros and cons to an asset-based loan.
The primary benefit of an asset-based loan or mortgage is that you can make use of assets you already have, regardless of your current financial status. This means that your current income will not be factors for loan approval. Asset-based mortgages are designed for home buyers and homeowners who have significant verifiable assets and would benefit from alternative loan qualification.
Unlike a reverse mortgage, you are allowed to apply for an asset-based loan for a second home that is not your primary residence. While asset-based loans typically have higher interest rates, Griffin Funding has access to wholesale asset-based mortgage rates for the most favorable loan terms.
Business owners can do an asset-based cashout refinance home loan to fund their business.
Risks of Asset-Based Financing
How to Get an Asset-Based Loan
To secure an asset-based loan or mortgage, you must apply with a lender. To apply for the loan you will need to identify the assets you will use to qualify and submit any requested documentation. Once the lender performs an initial review of your application and determines that you are a good candidate for an asset-based mortgage, they will present you with a preview offer and require you to make a preliminary commitment before they perform a complete review of your assets. Once your assets are fully audited, you will receive your approval and funding for your loan.
What is Considered an Asset for a Loan?
The types of liquid assets that can be used as collateral are checking accounts, savings accounts, certificates of deposit (CDs), money market accounts, mutual funds, stocks, and bonds. In some cases, asset statements alone may be used by high-net-worth individuals for qualification.
Most importantly, the assets presented for your loan must be easily convertible into cash.
Collateral for Your Asset-Based Mortgage
For retirees, assets that can be counted toward your income include:
- Bank accounts (checking or savings)
- CDs (certificates or deposits)
- Investment accounts (stocks, bonds, and mutual funds)
- Money market accounts
What Is a 6 Month SOFR ABL?
An asset-based SOFR loan is a valuable tool that can be used by high-net worth individuals to obtain funding for a new property purchase without having to show proof of income. In addition to this benefit, this type of loan has an interest rate that adjusts with the SOFR rate, which allows those with significant assets to potentially capitalize on lower interest rates without having to refinance.
The Secured Overnight Financing Rate is an index that calculates a weighted average of the interest rates that major financial institutions charge for overnight loans. When a mortgage is tied to this index, it is possible to get a mortgage rate that will automatically adjust to the 30-day average of the SOFR index.
With our 6 month SOFR Asset Utilization loan, you can take out an asset-based loan with a low-interest rate that’s locked in for a predetermined amount of time. Once that introductory period ends, your interest rate will begin to adjust every 6 months based on the SOFR index, meaning your rate could potentially rise or fall.
We currently offer 6 month SOFR ARMs, 3/6 SOFR ARMs—meaning the interest rate is fixed for 3 years and then adjust every 6 months after that—5/6 SOFR ARMS , 7/6 SOFR ARMS, and 10/6 SOFR ARMS. As you can see, you can choose from a number of 6 month SOFR ABLs based on your preferences. We also offer other SOFR loans, such as 6 month SOFR DSCR loans and 6 month SOFR bank statement loans.
Asset-Based Mortgage Loan Rates
Secure Your Asset-Based Mortgage or Loan
Griffin Funding streamlines the process for asset-based mortgages and loans by using cutting-edge technology while providing 5-star service. Our goal is to leverage the value of your assets and minimize your interest rate for the best asset-based loan terms. Apply Online Now.