It sounds like magic, doesn’t it? A mortgage that allows for a loan-to-value ratio as high as 120%, portability, and can be used to pay off student loans. Oh, and it can be tapped into when you need cash or put on pause when you require a “Life Refresh.” Wow.
Well, it’s a very real thing now thanks to BurkeyLoan, a Miami-based portfolio lender that offers the “BurkeyLoan Millennial Choice Mortgage.”
What Is BurkeyLoan?
You might be wondering what on earth BurkeyLoan is? Well, Burkey is simply the name of the company’s founder, John Burkey, who seems to think his last name has a nice ring to it.
Name aside, his signature loan is looking to completely shake up the mortgage industry by offering features that aren’t traditionally available to homeowners. And he’s stuffing them all in one single loan program.
For starters, the BurkeyLoan Mortgage allows an LTV as high as 120%, meaning the entire property value can be financed, and another 20% of it can be tapped to pay off any student loans a borrower is grappling with.
The company does apparently require a 10% minimum down payment, which is based on the price of the home and the outstanding student loan debt together.
For example, say the purchase price is $500,000 and the borrower has $150,000 in student loans. The borrower would have to come up with a $65,000 down payment and they’d wind up with a loan amount of $585,000 on a home valued at $500,000.
That’s an LTV of 117%, even though they have “skin in the game” via that required 10% down payment. Despite that high LTV, no mortgage insurance is required.
Mr. Burkey added this high-LTV feature to address the concerns of Millennials, who might have great jobs, but are burdened with lots of debt from college and not much in the savings department.
They could turn out to be great mortgage borrowers, but traditional underwriting standards might shut them out.
Offered to Those Making Six Figures?
I did some digging on the BurkeyLoan website and found an article that notes a minimum income of $150,000 is required to get approved for the BurkeyLoan Mortgage.
Additionally, you seem to need 3-4 years of work experience, which is basically double the typical requirement for today’s mortgage borrowers.
It’s also a jumbo-only loan program, meaning loan amounts of $417,000 or higher are required, at least initially.
So the product is clearly targeting high-earning, reliable candidates who just happen to have a temporary debt problem.
Related to that debt, friends and family of the borrower can “participate in a borrower’s mortgage loan” by purchasing equity investments known as “BurkeyLoan Investment Shares.”
Aside from the high LTVs afforded under this innovative loan program, the BurkeyLoan Mortgage has a portability feature that allows the borrower to take the loan with them to a new property.
So instead of having to sell their existing property and pay off the mortgage with one lender and apply for a new one, they can simply take their debt with them and apply to it their next home purchase.
But wait, there’s more! The loan also allows borrowers to periodically tap into it via an “Equity Draw” feature. There’s also a “Life Refresh” benefit that can defer payments when “life events happen.”
In other words, this mortgage wants to be your life partner and never leave you, ever.
Borrowers can apply for the BurkeyLoan and get both pre-approved and underwritten before shopping for a home so they’re ready to go if a suitable property appears on their radar.
It’s definitely an interesting concept, and it’s nice to see products that address the needs of those who fall outside the typical credit box. For the record, SoFi also has a similar mortgage offering.
The program is available to independent mortgage brokers, community and regional banks, and credit unions that broker residential mortgages.
BurkeyLoan plans to hold and service the loans.