Low mortgage rates and increasing competition are primarily the two major trends affecting the real estate market. However, homeowners and players in the industry have recently had to adjust to the changing payment methods. A recent report found that one in every nine potential homebuyers offered down payments in cryptocurrencies like Bitcoin.
Cash home buyers, such as Mill City Homebuyers, have also witnessed an increasing number of sellers willing to be paid through cryptocurrencies. With its increasing adoption, read on to understand how you can buy a home using digital assets, including Bitcoin.
1. Transfer Bitcoin To The Private Seller
The best way to purchase property using Bitcoin is by transferring directly to the private seller. However, for this to be possible, you should find a seller who accepts Bitcoin payments. Unlike cash payments and checks, you should discuss the terms of exchange extensively with the property seller. Bitcoin transactions also don’t leave a paper trail, so you should consult an attorney to ensure you fill out the relevant paperwork to avoid future problems.
2. Applying For Mortgage Using Bitcoin Holdings
Qualifying for a mortgage in the real estate sector can prove challenging and very confusing. For instance, major mortgage lenders like Freddie Mac should be consulted before significant changes are implemented. Fortunately, Freddie Mac has made its position on how Bitcoin owners can use their coins to qualify for a mortgage.
Even though the use of cryptocurrencies in real estate is still new, Freddie Mac has indicated that citizens can secure mortgage loans using Bitcoin if they satisfy these specific requirements. However, these guidelines are updated regularly, and you should be on the lookout.
Many other lenders also allow applicants to secure mortgages using Bitcoin holdings. However, before you can secure a mortgage using Bitcoin, you should have all the necessary documents to back up your investment claims. This includes documentation of the original purchase and proof of sale.
3. Convert Bitcoin To Cash
Converting Bitcoin to cash is probably the simplest way Bitcoin holders can pay their down payments. If all sellers are hesitant to accept Bitcoin payments and you don’t want to apply for a mortgage, simply convert part of your holdings into cash. Bitcoin transactions are very sensitive. Before selling, ensure that you document all the processes, right from the initial purchase to the eventual sale.
Your broker or bank can flag your purchase if you don’t have these documents. You should also make the transactions in U.S dollars and report your profits to the IRS. Remember that Bitcoin holdings are assets or properties in the U.S., so they are subject to capital gains taxes.
Homes are among the many surprising things you can purchase using Bitcoins. However, you should research extensively and prepare for various hurdles that face homebuyers who want to buy homes using cryptocurrencies. Primarily, you should ensure that you plan your dates accordingly. For instance, you shouldn’t cash out at the last minute.
Lenders often raise red flags for large deposits, request additional paperwork, or completely disqualify your application. This stalls your mortgage approval and home buying process. You should also watch out for market volatility.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.