Mortgage 100^®

Is Mortgage 100^® right for me?

If you are planning to liquidate assets to make a cash down payment, consider the advantages of Mortgage 100^®. This innovative financing strategy offers you the benefit of:

• Reduced up-front mortgage expenses. Use Mortgage 100^® to control your up-front expenses by reducing your down payment to as little as zero without having to pay mortgage insurance.
• Preserved investment strategy. Mortgage 100^® allows you to keep your investment portfolio intact by avoiding liquidation of your assets to fund a down payment.
• Increased potential tax deductibility. By financing the entire purchase price of your home, rather than an amount reduced by a down payment, you may increase the amount of deductible interest expense.¹
• Deferred capital gains tax exposure. Keep your assets invested and defer potential capital gains tax.

Click here for an example of how one family put the Mortgage 100^® program to good use.

What are the features of Mortgage 100?

• Avoid a cash down payment or receive a higher loan-to-value, by pledging eligible securities in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account.

• Mortgage 100^® can be used in conjunction with an adjustable, fixed-to-adjustable, or fixed-rate mortgage, as well as with the Merrill Lynch Blended Rate^® mortgage.

Merrill Lynch's Mortgage 100^®/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). Mortgage 100^®/Parent Power^® 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. Trading within the brokerage account for the 100% financing programs is subject to restrictions.

What are the eligibility guidelines for the pledge account Guarantee amount?

The Guarantee amount requirement is typically 30% of your loan amount. The Initial Setup Value, which cushions you against unexpected fluctuations in market value, is typically 130% of the Guarantee amount (these values are affected by several factors, including loan amount, underwriting, and securities issues, and may vary).

Calculating the Guarantee amount for 100% financing $300,000 property value, 30% security Guarantee = $90,000 Guarantee amount

The amount of eligible securities needed in the MLPF&S pledge account in lieu of the down payment: $90,000 x 130% = $117,000 Initial Setup Value

• Merrill Lynch accepts a wide variety of nonretirement assets, including stocks, bonds, mutual funds and certificates of deposit as eligible collateral.
• Assets are typically held in a CMA SubAccount^SM and are reported on your statement along with other account information.
• You can continue to buy, sell, or trade the pledge account according to your investment strategy (with certain restrictions).

If I don't meet the eligibility guidelines for Mortgage 100^® is there an alternative?

Consider a combination first mortgage and home equity line of credit:

• With a combination first mortgage and home equity line of credit, you can reduce your down payment requirement by financing up to 90% of your home's value.

Will a down payment help or hurt my current financial objectives?

Before you liquidate assets for your down payment, consider a down payment alternative.

Parent Power^®

The Parent Power^® program enables a relative to sponsor the securities to pledge for the mortgage applicant without having to be a co-signer of the loan. Parent Power^® offers the same benefits as the Mortgage 100^® program, such as no PMI on the mortgage, and the sponsor is still able to avoid potential capital gains and trade the pledge account.

To give you a better understanding of how the loan process works, take a moment to review the steps that will need to be taken to set up your Mortgage 100^®/Parent Power^® loan. Click here to view the process steps.

¹Please consult your tax advisor regarding the deductibility of mortgage interest.