Mortgages in the USA
Mortgages in the USA are available to everyone regardless of citizenship. According to the National Association of Realtors, 50% of foreigners in the country prefer to buy real estate on credit. Among resident-foreigners, the share of those who borrow funds is 66%, among non-resident foreigners – only 27%. A green card or work visa can simplify the process of obtaining a loan in America.
You need to collect a large number of documents, as well as have money for a down payment to apply for a mortgage loan. The American Mortgage Bankers Association recommends that a potential borrower raise the amount of 10% to 25% of the value of the acquired property.
The basic set of documents includes:
- one or two letters of recommendation from a bank, foreign or American, confirming at least a two-year history of cooperation with a client;
- credit history from a credit bureau – American or country of residence;
- a document confirming the availability of the necessary amount in the account in order to make a transaction within 3-6 months from the date of signing of the agreement;
- a certificate from the place of work about a certain fixed income or financial statements in case the borrower has his own business;
- documents necessary for the conclusion of the transaction (agreement, confirmation of the transaction, etc.).
Keep in mind that banks approach each potential client individually, therefore everyone will have to form the necessary set of documents depending on the circumstances.
US maturity rates are calculated using two main models:
- a fixed rate;
- a floating rate.
Repayment periods are generally between 15 and 30 years. Mortgage at a floating rate – a common practice in the United States, because it is beneficial to banks. Credit institutions themselves determine and change rates, linking them to US Treasury bond, LIBOR rates, etc. There are quite a lot of models for calculating floating rates, but the so-called hybrid is most widespread when a certain number of years (usually from 1 to 10 years), the borrower pays the minimum fixed rate, and then during the remaining repayment period (on average from 15 to 30 years), the rate changes with a certain periodicity. So, for example, formula 5/1 stands for 5 years of payments at a fixed rate, and then it changes once a year.
The most expensive real estate in America is in the state of California. Georgia, Arizona, Michigan, Ohio, Philadelphia, New York are among the most inexpensive in terms of real estate.
Mortgage features in the USA
The main feature of mortgages should include a more loyal attitude of banks to real estate, which will be acquired through a mortgage. American credit organizations are ready to provide a loan, both for the purchase of real estate under construction, and for the purchase of finished housing. Another feature is that most banks offer borrowers to receive a loan with a floating interest rate, the size of which will periodically change. This method allows banks to earn more money, but it gives borrowers a number of inconveniences, since the size of the monthly payment is constantly changing. Also, the peculiarities of the mortgage should include the ability to record the borrower’s income not only in the form of wages and rent payments, but also personal pension savings and dividends.
Is a mortgage in America available for foreign citizens?
Unfortunately, US banks practically do not lend to foreign citizens. As a rule, only customers of large foreign banks who are ready to offer such a service to their clients who already have accounts opened at their place of registration will be able to buy mortgage property in this country. Such borrowers must be ready, in addition to the standard documents required for a mortgage, to submit letters of recommendation from other credit organizations, a certificate from the credit bureaus, and in some cases a green card or a registration card for a foreign citizen. Requirements for documents can vary significantly from one bank to another. Based on the information received, the bank will make a decision on lending to the borrower or on refusal to provide a mortgage loan.
Category: Online Loans
Tags: loans online, Micro loans, mortgage