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An asset depletion mortgage loan is a type of mortgage that allows borrowers to qualify based on their assets rather than traditional income sources. This can be particularly beneficial for retirees or individuals with significant savings but limited regular income.
Here are some key features of asset depletion loans:
1. Calculation of Income: Lenders will calculate a monthly income based on the borrower’s liquid assets (like savings accounts, stocks, bonds, etc.). Typically, they divide the total assets by a specified number of months (often 60 or 120) to determine the monthly income.
2. Eligibility: These loans are often available to those who may not have a traditional job or steady income but have considerable assets. This includes retirees, self-employed individuals, or those who have recently sold a business.
3. Down Payments: Borrowers may still need to provide a down payment, and the amount can vary based on the lender’s requirements and the type of property being financed.
4. Interest Rates: Interest rates might be higher compared to conventional loans, reflecting the additional risk the lender is taking on.
5. Documentation: While it may not focus heavily on income documentation, borrowers will still need to provide proof of their assets and possibly other financial documents.
Before considering an asset depletion mortgage, it’s essential to weigh the pros and cons and consult with a mortgage professional to understand the specific options available based on individual financial situations.
