Banks seem to be loosening their hold on not allowing foreign investors to mortgage real estate investments here in the States. Til now, the challenges were that foreign buyers had no social security number, sufficient credit history, nor the extensive financial profile required by many American lenders.
However the trend seems to have changed its course, Some lenders are actually pursuing these options. One such bank which seemingly broke that mold back in 2009 is First Choice Bank. Others like Citi and Deutsche Bank are making strides to do the same, especially for those with whom they already have standing customer relationships in other countries.
Thomas Guss, president of real-estate brokerage firm New York Residence, says the ability to take out a mortgage on an investment property is a boost to the psyche of the buyer. Some buyers would be more likely to purchase if the option of a mortgage is available. It makes it easier to sell later, given the term of the mortgage creates stability as well as the advantage of building equity. Another benefit to the equity built, is the additional incentive to purchase more property.
The items those lenders focus on are not all the same, where some need documentation of assets and income, tax returns and bank statements, international credit reports and in some cases statements showing the liquidity of the borrower.
Cash requirements: Lenders could require a 35% to 50% down payment. Some banks will require a deposit account where 2 to 3 years’ worth of mortgage payments will be kept.
Limited choices: Most mortgages for foreign investors will offer fixed rates for a period of 3 to 10 years, then transition into an ARM. There are a few that offer 30 year fixed rates but will usually have a higher rate.
Name on the mortgage: Sophisticated investors will typically purchase under an LLC, or limited-liability corporation, which also serves as an identity protection method, however, lenders will typically require the actual buyer to personally guarantee the mortgage.
This reminds me of the new kid on the playground that nobody knows, who is visiting from out of town but wants to play. No one knows if he’s good or not so they don’t pick him first but once the game starts, they see his potential. Interesting…
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