Foreign National Loan
Although obtaining financing in the United States today is more difficult than during the property boom, it is still possible for qualified foreign investors to get a loan from several Banks when buying a property in United States. However, the loan is typically 50-60% of the purchase price or less. In other words, the down payment must be 40-50% or more of the purchase price.
Qualification is not based on the FICO credit score and is relatively easy. Foreigners are not required to have a credit record in the United States. Of course, the borrowers must have a job or be self employed in their home country.
The interest rate charged may be slightly more than for a US resident. Some Banks offer an ARM (Adjustable Rate Mortgage) loan or others have a 30 year fixed interest rate loan. The ARM loans may have an interest rate fixed for 3 to 5 years, after which the interest rate will be based on an index plus margin, they are amortized over 30 years.
Here are the basic steps to obtain a home loan in the United States :
a. Fill in an application form (1003) and signing of various disclosures required by the Bank/Government.
|Section I :||Mortgage applied for is typically conventional.
The amount is usually 60-65% of the purchase price
Signature(s) only if joint loan application.
|Section II:||Property address, purpose of loan is purchase
Title will be held in borrowers names. Manner of holding title can be joint-tenancy, community property, etc
|Section III:||Borrower/Co-Borrower Info|
|Section IV:||Borrower/Co-Borrower Employment Information|
|Section V:||Income Information|
|Section VI:||Asset and Liabilities|
|Section VII:||Transaction Detail (Purchase Price, Down Payment, etc)|
|Section VIII:||Declaration (most of the checkboxes should be checked No)|
b. Verification of Income
Income is usually verified through a letter of employment from employer (even if self employed).
c. Verification of Assets
Assets are usually verified through bank statements. Many lenders will require proof of down payment and a reserve which may be in the order of 12 months of PITI (Principal, Interest, Taxes and Insurance) payments.
d. Verification of Identity
Identity is usually verified through a copy of the borrower’s passport, US visa, and a business card.
e. Credit References
Sometimes, the Lender will require a credit reference from a local credit card or insurance company. Alternatively, in some countries, the Lender may require an International Credit Report.
f. Purchase Contract
Copy of the ratified contract is required.
g. Open a checking account in USA
Usually borrower will be required to open a checking account in USA. Typically at the Lender Bank.
Many people would then have an auto-debit set up to pay for the mortgage.
h. Signing of loan documents at escrow office and subsequent funding of the loan.
Alternatively, borrower can sign a power of attorney which is approved by the Lender and escrow company. The attorney-in-fact can then sign on behalf of borrower at the escrow office.
This whole process will take approximately 30-45 days from the day when the application is submitted.
Please contact us for further information.