Can I use my stock portfolio as a down payment on a home loan without having to liquidate my stocks?
bookstoredude asked:
And how would I go about doing it? Through the mortgage company? The brokerage house? Some other third party? What paperwork would be involved and what else do I need to be aware of?
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And how would I go about doing it? Through the mortgage company? The brokerage house? Some other third party? What paperwork would be involved and what else do I need to be aware of?
December 29th, 2008 at 7:19 pm
I wouldn’t recommend it but if you want to do it you would get a loan using the stocks as collateral for the loan. You then use the loan proceeds for the down payment. I don’t recommend this course of action because if the value of the stocks falls you could be forced to sell your house to pay back the loan.
December 31st, 2008 at 3:51 am
Yes you could use your portfolio as down payment on a loan without liquidating.
You should talk to the lending company, to verify if they would accept the securities as collateral, if they will they should have their procedures in place as to what they want you to do.
Most of the time, the lender will have the account considered a “collateral” account, many brokerage firms can code the account as such. The lender would receive copies of your statement, and trade confirmations.
Some lenders will want to hold the securities as collateral, but would also give you the freedom of buying additional securities or selling the ones you have. Your brokerage firm would deliver newly purchased securities to the lender for payment (or you could pay for them) and if you sold the securities, the lender could deliver the securities to the brokerage firms against payment.
This is not a recommendation to do this, only suggestions on how it can be done based on experience
January 1st, 2009 at 7:15 pm
Even if you don’t liquidate the stocks, since you’re effectively giving them to somebody else, you’re deemed to have disposed of them. Also, there’s rules about changing ownership of securities, in that for a third (unrelated) party, it has to be conducted via the exchange.