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I looked into Milo a couple weeks ago and it seems like a complex financial product, compared to a traditional fixed-rate conforming loan. The interest rate dep

I looked into Milo a couple weeks ago and it seems like a complex financial product, compared to a traditional fixed-rate conforming loan. The interest rate depends on the value of your collateral and you are subject to the risk from the change in the value of your collateral [1]. From their FAQs, it's not clear to me whether your house is at risk if your crypto collateral gets liquidated, but you stay current on your mortgage. But your rate will go up if your collateral value goes down, so you might no longer be able to afford your loan. It sounds like if you get liquidated, they keep the liquidated USD as collateral [2], and if you defaulted, that would be credited to your loan balance (but this is not stated in their FAQs). From an investor perspective, if I'm understanding this product, this should be pretty safe. You still have a lien on the home as collateral, along with the cryptocurrency. They mention an appraisal, so I'm guessing the loan-to-value ratios are still capped at 100% (they won't lend you more than the home is worth). The crypto liquidates at 35% of value, so that means in a default, they just need to recovery 65% of the home value to be made whole. Still, might be less hassle to just liquidate the crypto yourself, buy straight cash, and realize the tax gains. [1] https://help.milocredit.com/en/articles/5915495-can-the-interest-rate-of-my-crypto-mortgage-change https://help.milocredit.com/en/articles/5915495-can-the-inte... [2] https://help.milocredit.com/en/articles/5915515-how-much-can-my-crypto-collateral-drop-in-value-before-my-asset-is-liquidated https://help.milocredit.com/en/articles/5915515-how-much-can...

SilasX 4y ago
You can also borrow against your crypto on much better terms via Compound[1]. Wrapped bitcoin (a bitcoin claim ticket trading on the ethereum network) has a collateral factor of 70%[2], meaning you can borrow against that much value, and the loan value just has to stay below that to prevent liquidation. For ETH, the figure is 82%. You could borrow a stablecoin, on which the rates are ~1% (FEI) to ~4% (DAI) and convert those to dollars. (Or do the same with some other non-stablecoin crypto.) Of course, then there'd be the question of how that affects your mortgage application process otherwise. What do you need to tell them about this loan? It's effectively like a pawn loan: fully collateralized and no ability to gain priority in payment in court. From the lender's perspective, it's like you already sold it, but with the option to buy back. (Not legal advice.) [1] Defi lending: https://compound.finance/ https://compound.finance/ [2] https://compound.finance/markets/WBTC2 https://compound.finance/markets/WBTC2

SilasX 4y ago

You can also borrow against your crypto on much better terms via Compound[1]. Wrapped bitcoin (a bitcoin claim ticket trading on the ethereum network) has a collateral factor of 70%[2], meaning you can borrow against that much value, and the loan value just has to stay below that to prevent liquidation. For ETH, the figure is 82%. You could borrow a stablecoin, on which the rates are ~1% (FEI) to ~4% (DAI) and convert those to dollars. (Or do the same with some other non-stablecoin crypto.) Of course, then there'd be the question of how that affects your mortgage application process otherwise. What do you need to tell them about this loan? It's effectively like a pawn loan: fully collateralized and no ability to gain priority in payment in court. From the lender's perspective, it's like you already sold it, but with the option to buy back. (Not legal advice.) [1] Defi lending: https://compound.finance/ https://compound.finance/ [2] https://compound.finance/markets/WBTC2 https://compound.finance/markets/WBTC2