Jumbo Loan financing in Orange County is making a comeback, as can be seen by the usage of the Pledged Asset Loan program. The Pledged Asset loan program allows a home buyer to buy a luxury home without continuing to control assets that would otherwise have been used on the down payment.
Example of a $4,000,000 Home Purchase in Newport Beach Using Pledged Assets
While most Orange County Jumbo Lenders require 25% or more down payment on a $4,000,000 home price, it is possible to only come up with a 10% down payment. Using Pledged Assets, the buyer would only need $400,000 for the down payment. The buyer would need to "pledge" assets towards what would have been the remainder of the down payment. In this example, this Portfolio Lender requires a 40% down payment. Since 10% will be the out of pocket down payment, the buyer would need to pledge 30%, or $1,200,000, towards the remaining down payment requirement.
Advantages of the Pledged Asset Loan Program for Orange County Home Buyers
- This program allows the borrower to maintain liquidity.
- The borrower is allowed to avoid capital gains taxes associated with the liquidation of assets.
- Eliminates the need to liquidate in order to obtain the cash needed for the down payment.
- The borrower continues to benefit from future interest, dividends, and/or the appreciation of their assets.
What Assets can be Pledged?
First, its important to note that the assets do not even need to be owned by the borrower. Another person, Trust, or entity can own the assets. Also, the property being purchased can be a Primary home, Second home, or Investment property. While some banks offering a Pledged Asset program require the pledged assets to be transferred to the lending bank, there are new programs offered that now allow for the assets to remain in their current accounts, provided the account is managed by an Investment Broker/Dealer in the United States. The owner of the assets, in this case the "Obligor" continues to control, invest, and trade in their investment account. Eligible assets can include Certificates of Deposit, stock, mutual funds, cash. Eligible assets do not inlude IRA's 401k's, options, annuities, or insurance benefits.
The Pledged Asset mortgage program is the perfect solution for high net worth individuals or company owners who "have the cash" but prefer to invest it rather than put it into the equity of their home. The Pledged Asset program goes hand in hand with a few other Orange County Portfolio Lender programs, such as the Asset Depletion loan program and the Foreign National loan program. These programs are flexible in many ways, but also do have guidelines that need to be met. The first step is to talk with a Jumbo Loan Expert who can help determine eligibility and also provide customized loan scenarios.
Authored by Tim Storm, an Orange County, CA Loan Officer MLO#223456 with 22 year experience closing loans- Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-829-1846.
Call our office today and see how we can help you and your family.
949-829-1846| tstorm (at) ochomebuyerloans.com