What is a collateral mortgage? Well today, you're going to find out because that's the
video that you clicked on. My name is Kris Krohn, this is Limitless wealth TV
and today, we are going to our advanced vocabulary to break it all down for you.
Alright, my friends. Advance real estate vocab word of the day is collateral
mortgage, right. So you're obviously getting pretty deep in real estate if
you're asking questions like this. If you're watching this video, I want to
applaud you, it means that you're really going to a place where you really want
to beat the information, you want to beat the system, you want to win because
you're learning your vocabulary, you're learning what you need to know. Let's
talk about collateral mortgage and first just talk about what is collateral? Let's
say that you want to make an investment and the bank's looking at you and
thinking, oh man, we think Kris that you're a little bit of a risky bet for
us, can you put some collateral up? What's
collateral? If default on the loan then it's money I'm going to have to owe them.
For example let's say that my car's paid off and I'm like, great, we've got your
vehicle as collateral and then my wife owns the Hope Diamond worth two million
dollars right so we've got that as collateral. What collateral really means
is that if an investment goes south then anything you put in as collateral, the
bank can take from you so it can be a little scary, you got to make sure you've
really confident in what you're doing. Well a collateral mortgage is basically
when you put up a home that still has a mortgage on it but it still clearly has
equity and you're basically putting it up to the bank is like a promissory note.
I'm basically saying, hey, I'm doing this other deal but if anything goes south, then
guess what, then you get this home with this mortgage as collateral so by the
way, I'm a huge fan of collateral because sometimes investments will say, hey, put
up some extra money as security and instead you can say, hey, how would I give
you a promise or you know saying, I promise, I'm going to pay it. They're like,
well what's that worth? Well take a look at some of my collateral. I've got this
asset, I got this asset, I got this asset and all the sudden someone says wow, if
you're really to put that on the line then you must be confident. Understanding
that lending money is always just a game of confidence. We're using ones and
digits and numbers and credit scores and and checking a look at your reports as
ultimately determine one word, confidence. Can you
have confidence in you? And when you put up collateral here's what it tells
people.. You must be confident because if things go south, what do they get? They
ensure that they have a way of getting their money back. Sometimes when an
investment goes bust, people lose money so then they get the collateral and then
they what? They make up. One more thing on this.. Often certain investments are
looking for a 2x on collateral. What does that mean? That means that I picked up a
hundred thousand dollar note with, you gave me a hundred grand and I'm not
responsible to make payments and eventually give you a hundred grand back
but for you to feel comfortable giving me the money, I gave you $200,000 worth
of collateral. Let's just say that it's a mountain property worth $200,000 in paid
off, well the bank basically says hey, we can
always liquidate the mountain property at half off and get all of our money
back. Okay so it's a security, it securitizers, it produces security for
them, it helps them feel comfortable and ultimately collateral goes hand-in-hand
with confidence and security and security means I feel more secure
knowing that I've got more of your assets so if things go bad, then I can
liquidate these and I can still get my money.
Collateral mortgage just means that it's collateral tied to a specific piece of
property. Listen, with all this language that
you're learning, like, you could probably put on a clinic and start schooling
people on the words of finance and real estate and good for you, you deserve to.
Listen, that knowledge is power if you apply it so make sure that you're
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