Everybody knows that all of the mortgage servicers only accept US dollars when it comes to mortgage payments. But, can you really pay mortgage with bitcoin? Well, the answer is no and you cannot use bitcoin to pay mortgage. However, there are some third party companies providing service few years ago, working as intermediary between loan servicers and bitcoin holders. There were also others who have claimed to purchase real estate with bitcoin, but that is actually a different story since it is an agreement between seller and buyer and it is a cash-alternative transaction. In short, they are probably purchasing a property with bitcoin compared to cash. There’s no financing that takes place, nor is there mortgage to speak of.
Why Mortgage Lenders Accept Bitcoin?
A good way to look at it is why mortgage lenders accept any kind of non-USD currency for payments? First and foremost, it’d require currency conversion into currency that’s related to mortgage, which could be USD. Besides, you would not be paying with the bitcoin anymore. You would be converting your bitcoin to USD, sending them to the lenders. In this case, you’d pay your mortgage effectively with bitcoin, yet it could be an indirect, manual process.
There are also some bitcoin wallets, which enable bitcoin holders to sell holdings in whole or in part, and withdraw the funds to bank accounts. After doing that, bitcoin holders have US dollars to use to pay their mortgage. The way lenders could be willing in accepting bitcoins is once they save overwhelming value in currency. But, since then, it’d be doubtful provided the infrastructure in place together with what compliance stuff would have to happen.
In terms of valuation issue, what’d it be worth once it’s applied to the mortgage? The market of bitcoin is 24/7, which is nonstop action. It is also unpredictable because of the many exchanges that value the bitcoin in a different way at exact time. So, it would be difficult to nail down a value everybody agrees upon at this juncture. All of these add up to lots of unnecessary costs and risk lenders just would not want anything to do with. It’s the same reason why you can’t send your mortgage lender gold bars to pay mortgage or shoot them for several shares of Tesla or Amazon stock each month to meet your obligations.
Paying mortgage in bitcoin could complicate matters when and if you needed to document your history of payment for subsequent refinance or mortgage. Anonymity is not favored here. The lender would want to get paid in US dollars since there is no second guessing the value. There is no currency conversion. But, that does not mean you cannot pay mortgage using credit card.
There are also services that enable that since transactions involve US dollars and usually involve 2-step process where you charge the amount with the payment processor. After that, they will cut check to lenders on your behalf in cash.
Published by GetnSocial
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