Loans and Finances

Buying Real Estate with Bitcoin

January 22, 2018 by Mathew Mattila

After a very enthusiastic tip from a good friend a few years ago, I casually purchased some Bitcoin on the Coinbase exchange. At the time the cost to invest was approximately $600 for one Bitcoin. If you’ve been watching headlines at all it’s hard to miss the fact that although it fluctuates wildly, the value of Bitcoin has increased dramatically.

It seems that lately everyone is talking about Bitcoin, trying to figure out if it’s ‘real’ or a scam of some kind, and whether or not they should be buying cryptocurrency themselves. I’m not going to evangelize BTC, or even try to explain what it is or how it works – there are some very good resources online for information. What I do want to illustrate is that these new types of currency are poised to become a part of our everyday lives. Today, Bitcoin can be used to purchase just about anything, from a house to a cup of coffee at Starbucks – you can even spend your Bitcoin at online retail giants like Amazon and Overstock. Granted, buying a coffee is a lot less complicated than buying real estate, but both are happening and with more and more frequency.

Purchasing Real Estate with Bitcoin

As recently as the tail end of 2017 and as close to home as Tukwila, Washington a twenty-something aerospace engineer purchased a 3-bedroom house priced at $415,000 using Bitcoin Cash (BCH), an offshoot of Bitcoin. Generally, when a purchase is made with cryptocurrency (for a cup of coffee, for example) the buyer simply sends the seller the agreed-upon amount of currency directly. The seller has a ‘receiving address’ or digital wallet – expressed as a scannable QR code or a string of letters and numbers unique to their account – and the buyer sends funds to the seller from their own digital wallet using this information. In the case of the Tukwila purchase, it wasn’t as simple as a transfer of the BTC from the buyer to the seller because the buyer had acquired traditional financing on the home purchase and U.S. cash was required by the lender. The buyer’s BCH was used as an ‘asset’ to secure his loan – and then it was converted to/sold for ‘fiat’ (regular money) in order to make the actual purchase in the traditional way.

Back in 2014 a property was purchased for Bitcoin in Lake Tahoe – the price was 1.6 million dollars or 2.739 coins (based on the value of BTC at the time the purchase was made.)

There are numerous cases though where sellers put their properties on the market seeking Bitcoin specifically, and only, as payment. In these situations, buyers paid for the real estate outright with Bitcoin. In Miami, in December 2017, a 2-bedroom, 950-square-foot condominium for about 60 BTC. Or, a little farther from home, a developer is accepting Bitcoin for purchases on a project in Dubai consisting of two residential towers and a shopping mall.

In all of these cases, once the seller receives an offer he wants to accept, the transaction is, in essence, an all-cash purchase. As long as a lawyer isn’t needed it’s not necessarily any more complicated to complete a real estate transaction using BTC than it is to buy that cup of coffee – the buyer and seller simply have to agree that cryptocurrency is being exchanged and seal the deal. Although this doesn’t necessarily preclude the need for utilizing (and paying) real estate agents, inspectors, and any other specialists involved in the transaction. who may or may not accept Bitcoin in exchange for their services.

Lenders are getting in on the action as well, with players like Unchained Capital coming onto the scene. Unchained is relatively new lender offering loans backed by a buyer’s cryptocurrency assets. According to an article in Barron’s, Unchained allows buyers who own cryptocurrency to borrow up to $1 million with interest rates between 10% and 14%. The length of the loans ranges from three months to three years, rarely longer, with the principal due at the end.

Bitcoin Technology in the Real Estate Market

As the real estate market catches up to this new technology everyone from lenders, mortgage brokers, and real estate agents are taking note. One agent, in particular, has notably brokered four homes with Bitcoin. When asked what she sees as the biggest hurdle the real estate industry faces in terms of moving forward with cryptocurrency purchases, Piper Moretti states, “Bridging the gap between new technology and the “old school” way of doing business. Real estate is very slow to adopt new ways of thinking and implementing technology.” She goes on to clarify that the ‘technology’ she’s referring to is the tech backbone of BTC, called the Blockchain which she believes will, “…revolutionize all aspects of how deals get done.”

If you currently own Bitcoin and would like to learn how your cryptocurrency assets could impact your home loan or purchase, feel free to give me a call or shoot me an email to discuss.

Should You Continue to Rent or Is It Time Buy a Home in Portland?

October 16, 2017 by Mathew Mattila

Renting a home or apartment can certainly have advantages over homeownership. If you have a good property with a great landlord and a rent you can afford it might seem pointless to purchase a new home in the Portland area, especially with home prices spiking in certain neighborhoods. Renting (usually) means someone else must plan for, execute, and pay for repairs, upgrades, and upkeep. When you rent, you’re off the hook for the big-ticket issues that can crop up with home ownership. On the flip side, you’re subject to regular rent increases, little control over your environment, and no real guarantee the apartment or house you’ve been calling home will continue to be the place you make your coffee each morning once your lease comes to an end.

According to Zillow at the time of this post, the median price of homes currently listed in Portland, Oregon is $429,900 while the median rent price in Portland is $1,935.

For renters who are considering buying their first home, a $430K mortgage might feel daunting and even impossible at first glance, especially when compared with the average $1900 a month for rent. But it’s not that simple, and the only way to sort out whether or not purchasing a new home makes financial sense for you is to do the math.

Rent or Buy?

Here are two calculators to help you crunch the numbers: Zillow’s Rent vs Buy Calculator; Discover has another calculator with a unique format that’s kind of fun to play with.

Play the Numbers Game

Of course, the amount of cash you bring to the transaction for a down payment will impact the overall cost of your loan, so use the most accurate numbers possible with these calculators, but do play around with them to see what would change in this equation if you managed to put down just $5k or $10k more.

Also important to remember, your credit score, and the credit score(s) of anyone on the loan with you, will impact what size loan you qualify for as well as how much interest you pay over the life of your mortgage – and that’s something these calculators can’t take into account in real time.

Check Your Credit Score

Check your credit score now so you have an idea of where you stand and what you’re working with. If you have an ‘excellent’ score, coming in at 800 or above, you’ll qualify for the best mortgage rates. A score of 700 or higher is considered ‘pretty good’ and will still qualify for decent rates. Scores below 700 can present more of a challenge to the transaction and you’ll pay for it in higher interest rates on your mortgage loan. This handy calculator at MyFico will help you understand exactly how your FICO® score can impact the interest you’ll pay on your loan.

While you’re doing the homework and preparation toward the purchase of your new home, why not start working toward a better credit score as well? Even a small jump in your credit score may help with saving a bit on the principal of your mortgage.

According to The Motley Fool: “On a $250,000 mortgage, the difference between a 620 credit score and an “excellent” 760 adds up to more than $86,000 in interest savings over the life of a 30-year loan.”

If you knew that a little bit of work on your credit score over the next few months could save you $86,000 over the life of your mortgage loan, would you do it? Well, now you know.

Ultimately, the only way to determine if purchasing a home is a better financial option for you than renting is to sit down and go over the numbers with a local mortgage professional.

Talk to a Mortgage Professional

If you feel you’re ready to move forward with the process of buying a new home, get in touch. Together, we’ll take a closer look at how each of the different factors like credit score, down payment, and current expenditures and debt will come into play when it comes to the size and cost of your new mortgage. I may even be able to give you the insight you need on raising your credit score before you take out the loan, in order to help you get a better overall value on your new mortgage.

Not the right time for you purchase a new home? If you played with the Rent or Buy calculators linked above and it’s just not coming out in your favor, if your credit score is low, or you feel you don’t have the overall budget to make the jump from renting to buying right now, I’d encourage you to get in touch with me anyway. I’ll give you the information and tools you need so that you can start working your way toward achieving your goal of home ownership.

How Much House Can I Afford in Portland, Oregon?

September 21, 2017 by Mathew Mattila

As a mortgage broker with over ten years experience in the Portland, Oregon real estate lending industry I’ve watched first-time home buyers face an increasingly tough market. These days, with fewer homes within affordable range coming up for sale buyers are finding themselves in competition with developers, house flippers, and investors. The average home value in Portland is $416,700 while the current median household income is $63,850. According to Zillow, this puts only about 60% of the current real estate inventory in the metro area within reach for the ‘average’ home buyer.

The question I get asked most frequently by people and families looking to purchase a home is ‘How much house can I afford?’ My number one goal (after getting you into the mortgage that fits your home-ownership goals, future plans, and current circumstances) is to educate my clients so that they come to the table armed with as much information as possible. Knowledge is power in any real estate transaction; this is especially true for those new to the experience of shopping for and purchasing a home.

How Much Mortgage Can You Afford?

One of the single-most important pieces of information you can have when approaching the purchase of a new home is knowing how much home you can comfortably afford.

Your Income and Debt

To avoid overextending your finances and take on a mortgage you can afford, start by looking at what you can comfortably afford to pay per month. A good rule of thumb is to look for a home that costs between two and four times what you earn in income (after taxes) in a single year.

When calculating your finances, it’s important to take into account everything from your salary to your current debt and other monthly expenses like student loans, credit cards, and utility bills.

Your Credit Score and History

Your current credit score, as well as your credit history, also go into calculating your mortgage package. Just like it pays to manage your debt prior to locking in an interest rate on your home loan, improving your overall credit score ahead of time is a way to mitigate the amount of interest you’re going to pay on your home purchase.

Credit card debt is one of the top issues that buyers find they must address before they’re able to make their first home purchase, especially because lenders always give better interest rates to buyers with low debt. Don’t wait to look into your credit score until you’re ready to shop for a new home – do your homework. Spending a few months cleaning up your debt-to-credit ratio and paying cards off whenever possible can save you thousands of dollars over the life of your home loan.

Your Down Payment

Remember, that your down payment (the amount of money you pay toward the purchase of a home) not only impacts the amount you can safely afford overall, but it also influences the interest rate attached to your home loan. Having more cash to put down will save you interest over the life of your home loan, keeps your monthly mortgage payments lower, and could even make your offer more competitive against potential buyers who bring less cash to the transaction.

A good mortgage broker can help you determine the right amount to put toward a home in the form of a down payment.

Most traditional real estate transactions operate on a 20% down payment model, although with so many different loan options available today, a good broker can help you maximize a smaller down payment in some cases. Still, 20% down offers a good balance because it mitigates your interest rate and makes monthly payments more affordable.

Get Mortgage Information From a Professional

Buying a new house should be exciting and fun, but it is also a major life decision and definitely offers a learning curve for first-time home buyers. For the purpose of helping you begin to calculate what size mortgage you can afford, this blog post aims to cover the very basics. If you have a home price in mind and just want to do some basic math to estimate how much the monthly mortgage payment could be, feel free to use. this quick and easy mortgage calculator. If you’re ready to start the mortgage application process, get pre-approved by filling out this online home loan application and I’ll get in touch directly.

I specialize in guiding new home buyers through the mortgage and home-buying process and would love the opportunity to sit down with you to discuss your home-ownership goals, answer your current questions, and help you determine exactly how much home you can afford. Feel free to drop by my office at 1238 NW Glisan Suite A in Portland’s Pearl District, shoot me an email, or give me a call at (971) 404-9844.