Over the last decade, the real estate market has changed dramatically, from increased competition to low mortgage rates. Homeowners’ payment method to purchase new properties is one of the most significant changes. Some homebuyers nowadays save for their down payment by selling cryptocurrency like bitcoin.
A few years ago, saving for a down payment or purchasing a home with bitcoin seemed impossible. But it has become more acceptable in today’s society. A growing number of private home sellers, real estate agents, and mortgage companies are accepting it as an alternative form of payment.
What is Bitcoin?
Cryptocurrency (Bitcoin) is a digital currency not controlled by any central authority or government. Instead, it relies on peer-to-peer software and cryptography. It was invented by Satoshi Nakamoto, A pseudonymous person who outlined the technology in a white paper in 2008.
It is a type of digital money that exists independently of any government, state, or financial institution. It can be transferred globally without a centralized intermediary and has a well-defined and arguably unchangeable monetary policy.
Tips On How To Achieve Your Dream House Using Bitcoin
There are a lot of ways to purchase a property using cryptocurrency. Here are some tips that you may use to buy your dream house using bitcoin. You can use these ideas to decide if you want to purchase a property using digital currency.
Convert Cryptocurrency To Fiat Money
First, You must turn your digital currency into fiat money. Cryptocurrency exchanges include a crypto converter feature that displays how much fiat currency can be obtained in exchange for bitcoins. There are numerous exchanges, including Gemini, Coinbase, and Binance.
It has an easy-to-use interface that simplifies the entire bitcoin conversion process. After converting, you can immediately look for a home mortgage company like SoFi, and you could start investing in your desired property.
However, the fiat money must be kept in your name for at least two months before it can be considered an asset that can be used to purchase. Proceeds from the sale of cryptocurrency may be subject to capital gains tax, so consult with your financial advisor before proceeding.
Transfer Cryptocurrency Directly
Finding a seller willing to accept cryptocurrency as payment for a house can be difficult. Still, many sellers are already warming up to the idea. Some are already interested in purchasing Bitcoin, Ethereum, and other cryptocurrencies. In such cases, offering digital currency may propel your offer to the front of the line.
Use Crypto As Collateral
Another application for cryptocurrency in real estate is to use it as a down payment. Many platforms are releasing products with this purpose in mind. Crypto lenders offer crypto-backed loans with interest rates ranging from 1% to 6%.
A crypto-collateralized loan is appealing because borrowers are not required to liquidate their crypto holdings to obtain financing. It avoids the need to cash out your cryptocurrency and creates a taxable event to buy a home.
The loans can be used to make large purchases like cars and real estate. Companies claim that leveraging crypto assets can help everyone, from the unbanked to high-net-worth individuals, expand their lending options.
The Bottom Line
Buying a house with Bitcoin is possible but more complex than it sounds. Furthermore, while some online platforms allow people to use Bitcoin to buy and sell real estate, they also have limitations. To protect yourself and the seller, ensure you have reliable documentation during the transaction.
If you want to purchase a house with cryptocurrency, do your research and be prepared to face some difficulties. If you’re still determining if you’re cut out to be a cryptocurrency pioneer, consider waiting a few years for the real estate industry to become more comfortable with digital currencies before investing in a house.
Read Also: How To Set Up a Multisig Wallet for Your Cryptos
