Posted July 15, 2014Tweet
Foreign national mortgages have returned to the U.S. housing market.
Now, it's not just citizens of Canada, Mexico and the U.K. who can buy homes with U.S. financing. Anyone, from anywhere, with adequate downpayment and income can mortgage a U.S. home.
The return of foreign national loans arrives at an opportune time -- the U.S. housing market is gaining steam after a slow winter and spring.
According to the National Association of REALTORS®, international buyers purchased more than $68.2 million in U.S. residential real estate in the twelve months ending March 2013, comprising vacation home sales in Arizona; investment property sales in Chicago; and long-term investments throughout California and Florida.
In terms of total U.S. home sales by value, foreign buyers accounted for 6% of home sales nationwide.
This figure may rise in 2014 and 2015.
For much of history, investing in U.S. real estate has been profitable. Lately, however, as individual wealth increases in non-U.S. markets, investors abroad have sought the diversification and stability that the United States housing market tends to provide.
Real estate is the nation's largest asset class and values are up more than 10 percent annually in many U.S. markets since 2011.
Thankfully, banks are servicing foreign buyers in want of a mortgage. Different from 2008-2013 when foreign national lending was scarce, today's international buyers have options.
Foreign national mortgages are -- once again -- available via many U.S. banks.
U.S. banks are returning to foreign national mortgage lending. Loans are not available from every U.S. bank, but the ones that make foreign national loans available are tending to follow similar loan guidelines.
At minimum, as one example, a non-U.S. citizen should expect to make a home downpayment of 30 percent or more; while, in some cases, downpayment percentages will range as high as fifty percent.
The percentage of your downpayment will vary based on loan size, property type and a bank's overall comfort with your profile.
A home buyer with extensive international borrowing experience may be allowed to make a smaller downpayment than a buyers making his first international home purchase. Similarly, a buyer of a single-family home will typically be allowed to borrow more money than a buyer buying a condominium or co-op.
Beyond the downpayment, expect to provide the following to your lender:
Note that, because you will have a TIN, green cards, work visas and social security numbers are not required. The TIN will be used for tax payments to the U.S. government once annually.
Lenders will typically treat your purchase as a "second home" or vacation program unless the home is a designated rental property for income. Loans for investment properties carry more stringent standards and may require additional reserves or evidence of credit strength.
For non-English speaking buyers, or for buyers whose documentation is printed in a language other than English, translation services must be provided.
It's recommended to seek your local U.S. Consulate or Embassy for translation services. You will likely close on your mortgage at these locations, too.
Lastly, note that U.S. mortgage rates are not set by the federal government. Mortgage rates are set by individual banks and can vary wildly from lender-to-lender. If you don't like the rates you've been quoted by Wells Fargo, for example, be sure to compare those rates to the rates from a different bank, too.
Mortgage programs for foreign national buyers are available in all 50 states. If you plan to use foreign national financing, though, pre-qualify your loan before you submit a contract on a home, which may be binding.
Compare today's mortgage rates and see what rates for which you qualify. Rates are available online at no cost, with no obligation, and with no social security number required to get started.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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