The Miami mortgage company allows homebuyers to use the cryptocurrencies they already have as mortgage mortgages and does not require a down payment.
Milo is ready to lend up to $ 5 million at a time to individual mortgages. They require the borrower to pledge the full amount of the cryptocurrency Bitcoin and Ethereum’s assets before transferring them to custodians for secure storage.
They then make regular monthly payments at the same rates as those offered on regular mortgages, and lenders can take advantage of the stored crypto if the borrower defaults.
This could allow homeowners to potentially benefit in two ways by purchasing properties that are likely to increase in value while benefiting from the increased value of cryptocurrencies. It means that.
Vincent Berniske, 63, used a cryptocurrency-fixed seven-digit loan to buy two small apartments in Miami’s Coral Gables.
However, it also increases the risk of using assets that are already fluctuating to raise funds for purchases in the real estate market. This could face a slowdown in the coming months, just as borrowing costs will rise.
Real estate sellers receive dollars directly from Miro, but homeowners can also make monthly mortgage payments in either cryptocurrency or cash.
Milo has taken safety precautions to ensure that cryptocurrencies do not remain broken if their value plummets.
If the value of the cryptocurrency collateral drops below 65% of the loan amount, the borrower will be asked to provide more cryptocurrency or cash.
And if the value of the currency falls below 30%, Milo will immediately liquidate Bitcoin or Ethereum and store the amount in traditional US dollars.
Joseph Lupena, 38, is the man behind Miro. So far, Milo has approved a $ 340 million mortgage last month alone. Interest rates are consistent with the average borrowing cost of a traditional 30-year mortgage, between 3.95% and 5.95%.
Miami, which is rapidly becoming the capital of American cryptocurrencies, is now home to Miro, which allows borrowers to use cryptocurrencies as collateral to buy homes.
Milo allows up to $ 5 million in borrowers over 30 years from 3.95 to 5.95%.
“We intended to improve this and make it bigger,” said Miro’s founder, 38-year-old Joseph Lupena. Bloomberg.. “Milo aims to provide other long-term solutions to people with crypto wealth, not just mortgages.”
However, cryptocurrencies are notorious for their variability.
Bitcoin has plummeted by at least 10% in the last five days. As of Wednesday night, 1 Bitcoin is worth $ 39,200 and Ethereum is worth $ 2,877.
On the other hand, the stock price of S & P 500 has had only two such declines in the last 50 years. Beyond that volatility, there is still a fundamental disagreement about how much Bitcoin is worth, or even if it is worth something.
Boring Ape NFT Graffiti in the Winwood district of Miami, Florida.Cities are trying to establish themselves as the center of the crypto revolution in order for startups to fund the influx of workers and venture capital and have the opportunity to grow it.
Bitcoin surged 305% in 2020, but is now down more than 40% from its all-time high. Other altcoins, including Ether, have dropped similar amounts.
Cryptocurrencies are not always moving in the same direction as stocks and other investments, although they have often been in recent months amid concerns about rising interest rates.
“Acquiring personal assets like a home is a particularly big risk,” said John Kirschner, head of US securitized products at Janus Henderson Investors. Bloomberg..
“Given volatility, crypto mortgages are inefficient. People think Bitcoin will go to the moon, but no one expected a big financial crisis or Covid. Things will happen. “
But it hasn’t postponed Vincent Burniske using a 7-digit loan fixed to cryptocurrencies to buy two small apartments in Miami’s Coral Gables.
Bernice, 63, a sports media consultant, plans to use the newly purchased property as a rental property and has no concerns about the new type of loan structure using coins.
“I was convinced that I was on the traditional loan path. Comfortable. That’s what we know. But there are always better funding options and you really need to be careful. You have to pay.
For him, the fact that he was allowed to hold his code while he secured the loan using some of his Bitcoin and Ethereum holdings for a mortgage It was a big attraction.
“If you want to cash out, you have to pay a lot of taxes and get out early, leaving a lot of upside down at the table,” he explained.
David Lykken, who runs a mortgage consulting and advisory company, isn’t convinced by this new approach.
“Early adopters are always trying new things. Cryptocurrencies don’t have enough stability or trust in the broader investor community. Certainly not now — maybe never,” he says. rice field.
