There are a few must and preparations before you make that first offer.
1) First and foremost, find professionals to work with.
In the United States, it is customary that a Real Estate Agent list a property for sale with a commission of 6%. This commission is meant to be split between the Seller’s Agent and the Buyer’s Agent. You will need to have representation goto: www.MikeKnowsRealEstate.com for representation anywhere in the U.S.A.
2) Get Pre-Approved for a Mortgage
I recommend highly calling your mortgage professional mikegendreau@edinarealty.com and getting your loan pre-approved prior to submitting an offer. This will require being in contact with a Mortgage Broker that has experience dealing with Foreign National Buyers. The Mortgage Broker will ask you the questions necessary to take an application for the lender. You will then provide that Mortgage Broker with all the credit and income information that the lender needs including letters from attorneys, banks and accountants all translated into English. Having the Pre-Approval will allow the Foreign National Buyer and the Seller to be confident that the loan will close.
The documents that are typically needed to get the loan Foreign National Loan approval are:
1 Copy of Visa (if applicable)
2. Copy of Passport
3. Three Personal Reference Letters from Country of Origin. Letter must be from a lending institution and include the following:
- Credit was extended to the Borrower
- Borrower is in Good Standing
- High Balance
- Current Balance
- Payment Amount
- Payment History
3) Employment Verification Must Include the Following:
- Must be on company letterhead from Country of Origin.
- Must state Income for for prior 2 years and current income.
- Length of Employment
- Position of Borrower
For Self Employed Borrowers, please include:
- Percentage of Ownership in company
- Address of business for the past 2 years.
All letters must be translated into English by a certified translator.
3) Start a Banking Relationship Early
Most lenders will want to see that you have funds available in a US Bank account. They will require that your payments be automatically deducted from that account every month. It is also a great time to go ahead and put money in a US Bank Account while the Dollar is still weak.
Lenders will require you have an amount in the US Bank account equal to:
Your Down Payment - 25-30% of the Purchase Price
Your Closing Costs - be ready for 3-3.5% of the Loan Amount
Your Escrows - Escrows are the costs associated with State Property Taxes and Hazard Insurance that the bank will pay for you every year
Your Reserves - Most every bank requires Foreign Nationals prove 6-12 months of total monthly payments be already deposited in their US Bank account
The Total Monthly Payment includes:
Mortgage Payment - Principle + Interest
Property Tax
Homeowners Insurance (unless a Condominium)
Homeowners / Condominium Association Dues
I suggest using a bank that will give you Internet Access in your home country. I also suggest checking into the fees for transferring or wiring funds from your home country to the US Account. Citi Bank has offered “Free World Account Transfer” services so you can pass funds from your US Bank to your Foreign Bank for no fees. They may charge for exchanging money but a smaller bank would likely charge more. There are Foreign Exchange services that can act as intermediaries for low fees as well.
4) Don’t get caught up in the Short Sales and Foreclosures craze
There are ample properties at great prices. Short Sales and Foreclosures can be complicated transactions and can take far more time and effort from all parties to get the transaction completed successfully. In that time many things could happen to jeopardize the transaction or the loan approval. Foreclosures and Short Sales could also need costly repairs that will require your time, attention and money… so an inspection for mold is imperative.
If you are working with a pre-approval and a good Real Estate Professional, they can help you find a well maintained property with a motivated seller that will fit your requirements.
5) Consider Cash Flows
Make sure you understand Cash Flows - positive and negative - on the property you are interested in purchasing. If you are buying the property to rent (let) it is important to understand how much money you are making to make sure it fits your investment strategy. Entry and Exit strategies are important…but you will want to make sure you understand how every month will affect you financially.
Michael Gendreau
Professional Real Estate Consultant
651.779.2443
No comments:
Post a Comment