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Can You Use Cryptocurrency to Purchase a Home?

With housing purchases on the rise and the market being more competitive than I have seen in my entire career both as an agent and in the mortgage industry, get ready for….Cryptocurrency! In the past 8 months, searches that contain “Bitcoin” against “property” are up over 500% and Bitcoin is only one form of cryptocurrency.

So, what is cryptocurrency and how does it work? Great question!

Well, the short version is that Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.

This first use of crypto to purchase a home took place as far back as 2014, but lately this trend has really gained momentum. According to a recent 04/07/21 article in The Block by Ryan Weeks almost 40% of banks in the United Kingdom (we call that England) are willing to allow proceeds from crypto investments to be used for deposits on home purchases. Fannie Mae & Freddie Mac have verbally confirmed that they now consider this form of currency to be a “liquid asset” and require the same type of documentation as they would for any other type of liquid asset. This requires the prospective home buyer to document that it has ownership of the currency and that they have owned it for at least 2 months. FHA/VA has not allowed for this form of currency to be acceptable as of this writing.

Tracking how much of this is actually going to occur however is a paradox, as of course, one of the purposes of Bitcoin is to allow anonymous transactions. So unless an entity self-reports it’s hard to find evidence of Bitcoin commerce.

Now as to the practicality and difficulty of using cryptocurrency, I will say that it will be an uphill battle as the average age of a mortgage underwriter (those are the people who make decisions on your loan approvals and requirements) is 43 years of age. Crypto currencies are not likely to be something that they are familiar with and as such I do not envy the Mortgage advisor/originator that will have to drag them through the explanation of how crypto currencies work. As with everything, in the beginning it will be difficult and slow but as this form of payment grows in its acceptance, so will the ease of using it to purchase your next home. And for the record, the average age of a mortgage originator is 47 years old.

If you have any questions please reach out to us at PhillyMortgageTeam@afncorp.com

Article Written By: Kevin Berju

Looking for a Lender in Philadelphia? Contact the Philly Mortgage Team. Click below.

 

Kevin Berju starts Philly Mortgage Team with over 25 years in the mortgage industry. Prior to working with residential and commercial mortgages, Kevin graduated with a business degree from Temple University, owned his own business, and worked as an agent for years in both commercial & residential Real Estate. With Kevin’s diverse knowledge of the real estate and mortgage industries, his clients are thoroughly guided throughout their home buying or refinance process. As a result of his knowledge, attention to detail, responsiveness to his clients, and exceptional work ethic, Kevin was awarded the Five Star Mortgage Professional recognition in Philadelphia Magazine for the past successive years as well as reaching the top 1% of all originators country wide since 2012 as designated by Mortgage Executive magazine.

As a mortgage professional for over 2 decades, Kevin is an invaluable resource for both first-time and experienced home buyers. With his accomplishment of the Certified Mortgage Planning Specialist designation, Kevin is placed in an elite group of the top 5% of mortgage professionals in the industry. Looking to Purchase or Refinance in Pennsylvania, New Jersey, or Florida? Kevin Berju is the Lender for You!

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