How foreign buyers can get a mortgage for a home in the United States


Amid economic instability and global unrest, foreign buyers have found an attractive place to park their money in US real estate in recent years.

Now rising home prices in the United States and a strong dollar mean that foreign buyers will need more money to buy a home here. Last year, 50% of foreign buyers paid cash for US residential real estate, according to the National Association of Realtors (NAR). Mortgage financing, however, is another option.

“Most [overseas buyers] don’t think they can get a loan, so they pay cash. But they much prefer to take out a loan, even if they have to pay 40%, ”says Chris Furie, partner at Los Angeles-based Insignia Mortgage. “It allows them to be able to afford something a little more expensive. “

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Non-resident foreign nationals are not eligible for conventional government guaranteed loans or most jumbo mortgages, which exceed the authorized thresholds of $ 417,000 in most parts of the country and $ 625,500 in some areas in Canada. high price. While most lenders, including the big banks, see the prospect of suing a delinquent borrower abroad as too risky, some, like Total Mortgage Services, based in Milford, Connecticut, offer non-compliant loans. affluent foreign borrowers and then sell them to an emerging market. non-traditional lenders, says John Walsh, CEO of Total Mortgage.

“The applicant goes through the standard eligibility process using other forms of credit, income and asset checks,” Mr. Walsh said. Total Mortgage can now lend anywhere from $ 200,000 to $ 2 million to well-qualified non-resident aliens.

However, these loans require a larger down payment than most mortgages – 30% and more on loans up to $ 1 million and more for larger loans for the purchase of a second home, explains Mr. Walsh. Rates range from 5% for a five-year variable rate mortgage to 6.625% for a 30-year fixed rate mortgage, says Walsh.

In California, Insignia Mortgage completed $ 80 million in mortgage purchases and refinances to foreign nationals in the past 12 months; the support comes mainly from regional banks, explains Damon Germanides, partner of Insignia. The programs available require a minimum loan amount of $ 500,000 up to $ 7 million for three, five or seven year MRAs with current rates ranging from 2% to 3% for the initial period at fixed rate, a declared Mr Germanides. .

After:Governments use levers to cool or revive the foreign buyer market

Foreign borrowers often find the best rates and a smoother qualifying process with banks that operate both in their home country and in the United States, says Mathew Carson, owner of San Francisco-based West County Mortgage. HSBC, based in London, which has offices in 71 countries and territories, is a leader in this market, and Citibank also has a program.

Chinese borrowers can use the East West Bank, based in Pasadena, California, which has offices in China. Other lenders include Miami-based TotalBank, a member of Madrid-based Grupo Banco Popular, and Mount Laurel, New Jersey-based TD Bank, a subsidiary of TD Bank Group in Toronto.

For example, TD Bank offers Canadian borrowers a “cross-border” program with variable rate mortgages for US second homes, says Ray Rodriguez, the bank’s regional sales manager for the New York subway. “We charge the same rates as US customers and have the same subscription,” he adds. “It’s 20% less whether you live in New York or Toronto.”

Borrowers do not need to have a TD Bank account to qualify for the loan, Rodriguez says.

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Here are some additional tips that foreign borrowers should keep in mind:

• What’s needed. Since most foreign borrowers do not have a credit history or U.S. tax returns, qualification is based on tax returns and bank statements from their home country, Mr. Germanids. Other forms of documentation can include a letter from an accountant or tax advisor stating income and assets, and at least six months of credit card statements, he adds.

• Do not be surprised. The mortgage eligibility process in the United States is very different from that of other countries, says Rodriguez. For example, US mortgages require more documentation than Canadian loans, which also often close in less than a week, compared to the usual 30 days or more for a US loan, he adds.

• Apply in advance. Since the qualification process is more complicated and time consuming, it is advisable to take the extra step of submitting documents and obtaining pre-subscription, Mr Furie said.

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