100% Financing

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100% Financing Program with Mortgage 100® and Parent Power®  

When combined with a Merrill Lynch Home LoansTM mortgage, these down payment alternatives can help you avoid disrupting your investment strategies by allowing you to purchase a home – for yourself or to sponsor a relative -- with no cash down payment. You may even be able to finance up to 100% of your home's value.

Mortgage 100® 

This program allows you to purchase or refinance a primary, second, or investment property by pledging eligible securities in a Merrill Lynch pledge account instead of liquidating assets to make a cash down payment. Since your cash will not be used for a down payment and you do not have to liquidate securities, this strategy may enable you to:
  • Minimize upfront mortgage expenses
  • Keep your overall investment approach on track
  • Increase your potential tax deductions1 
Minimize up-front mortgage expenses. 
  • Reduce or even eliminate your down payment.
  • Eliminate Private Mortgage Insurance (PMI).
  • Choose a “0” points mortgage closing option to reduce your total out-of-pocket mortgage closing costs.
  • There are no additional fees or higher rates to use 100% financing.

Keep your investment strategy on track.

  • Remain fully invested by holding eligible assets in a Merrill Lynch pledge account, and continue to buy, sell or trade in that pledge account within Merrill Lynch Home LoansTM guidelines.
  • Continue to have the opportunity to earn dividends, interest and capital appreciation.
  • This means that you can potentially enhance your net worth.

Enjoy potential tax benefits.

  • Defer any capital gains taxes that might be incurred from liquidating securities for a cash down payment. (Please consult your tax advisor.)
  • Potentially increase the amount of your tax deductible mortgage.
Parent Power® 

This program lets you help family members purchase or refinance a primary home by leveraging your assets—in a way that does not disrupt your overall investment strategy. With Parent Power®, you can help a family member finance up to 100% of a primary residence by pledging eligible securities. It has all of the features and benefits of Mortgage 100®, but in addition, the sponsor does not have to co-sign the loan and incurs no gift tax (please consult your tax advisor).

Merrill Lynch’s Mortgage 100® and Parent Power® programs require the pledge of eligible securities owned by an individual and maintained in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account. Member, Securities Investor Protection Corporation (SIPC). The Mortgage 100® and Parent Power® programs may not be suitable for everyone and a default on your mortgage could result in both the loss of your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required. Merrill Lynch may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral (Please consult your tax advisor.). Trading within the brokerage account for the 100% financing programs is subject to restrictions.

 

How one couple used Mortgage 100® to maintain $100,000 that would have traditionally been used for a cash down payment:

Michelle and Robert wanted to purchase a $500,000 home, and working with their Merrill Lynch Financial Advisor determined that the Merrill Lynch Home LoansTM PrimeFirst® adjustable-rate mortgage product best fit their financial needs.2 (Read important information.)

They were considering liquidating $100,000 (20% of the purchase price) of their portfolio to fund their down payment. Mortgage 100® gave them the option of pledging securities in lieu of a cash deposit. They were able to finance the full $500,000 and keep the $100,000 in their portfolio.

 

Mortgage 100® Traditional 20%



Down Payment
Total purchase price $500,000 $500,000
Down payment 0% 20%
Required cash down payment $0 $100,000
Total loan amount $500,000 $400,000
Guaranty amount ($500,000 x 30%) $150,000 $0
Initial collateral value ($150,000 x 130%) $195,000 $0
Maintenance value ($150,000 x 110%) $165,000 $0

 

  • Based on a $500,000 home, the Guaranty amount is $150,000.
  • To cushion this Guaranty amount against market fluctuations add 30% to the guaranty amount to get to the Initial Collateral Value, which is the value needed in the pledge account at the time of closing.
  • So, to finance 100% of a $500,000 mortgage loan, you’d need a value of $195,000 in pledge eligible diverse securities at closing. After the closing the value of the account(s) can fluctuate due to the market to 10% over the guaranty amount in the account, which is the Maintenance value, or $165,000. If below the Maintenance value the client will be in a collateral call. If in a collateral call the deposit of additional pledge eligible assets will be needed so that the account is above the Maintenance value in order to avoid the liquidation of the account.

The case study presented is hypothetical and does not reflect a specific strategy we may have developed for an actual client. It is for illustrative purposes only and intended to demonstrate the capabilities of Merrill Lynch. It is not intended to serve as investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Results will vary, and no suggestion is made about how any specific solution or strategy performed in reality.


1Neither Merrill Lynch nor its Financial Advisors provide tax advice. Please consult your tax advisor regarding the deductibility of mortgage interest.

2When deciding whether an adjustable-rate mortgage is right for your situation, you should consider the potential risk of rising rates and payments and such factors as how long you plan to own your home.

This is an “interest-only” mortgage that allows you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask about what your payments can be if interest rates increase.

 

Mortgage 100 and Parent Power are registered trademarks of Bank of America Corporation.

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