We are sure that many of you here are curious to know how stock loans actually work. Well, the thing is that, stock loans work differently than a mortgage loan, however, it is said to serve similar purpose of financing real estate. Rather than using real estate properties as collateral for the said loan, the stock portfolio (which comprises bonds as well as other marketable securities that might work) you have will work as the collateral instead. Basically speaking, the amount that you can borrow for stock loan is dependent on the quality of your portfolio. Let us say, your portfolio consist of highly liquid stocks like those that are listed on the various entities, this will allow your to have a higher loan to loan percentage. This is in comparison with thinly traded portfolio for penny stocks. As for the loan value percentages, it can be as high as eight percent.
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There are other things that you have to be aware of when it comes to stock loans such as the fact that lenders will usually ask borrowers to move the portfolio of stock they have, which they will be using for the loan, against their institution. There is not a need for them to move the whole portfolio they have, just a portion of the portfolio they are using as collateral. Since you already have an idea on how stock loan works, you might be wondering why some people prefer to get a stock loan instead of a mortgage loan. Well, the reason for that is due to the fact that stock loans offer many benefits and advantages. First and foremost, in order for you to qualify for a stock loan, you must have a valuable and high-quality portfolio. It has nothing to do with the value of the property, your credit history as well as your income. That is why, if you are worried that you might not qualify for the said loan because of your bad credit history, worry not as you will be able to avail it. Just make sure that your portfolio is valuable and of high-quality. Check out
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There are other good things that you must know regarding stock loans like its speed. If you are wondering why stock loans are fast when compared to mortgage loans, well, that is due to the fact that there is no credit underwriting of the borrower and also, no property appraisal.
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http://www.huffpost.com/entry/how-to-calculate-net-worth_n_5af32d7ae4b0859d11cfc2d0.