What Buyers Need To Know About Today's Foreign National Mortgage Market
As the dollar slides against the world's currencies, foreign national buyers are flocking to U.S. housing market for second homes and investment properties. Since September 2007, a European's cost to buy a $300,000 property in the United States has fallen by 13 percent. But just because prices are falling doesn't mean that buying homes is getting easier. Mortgage guidelines have tightened for foreign national buyers just like they have for domestic ones. Here's what foreign national buyers need to know about today's market:
You won't find foreign national investor mortgages at the Big Banks
In September 2007, the largest foregn national mortgage lenders all but eliminated foreign national home loans from their respective product menus. This squashed a huge source of mortgage money and it trickled down to the smaller mortgage players that sold their loans "up the chain".
Look for smaller mortgage banks and "private" investors to finance foreign national mortgages
Big Banks don't want to finance foreign national investment loans but there is plenty of money available. All you have to do it find it. In every U.S. market, there are always small banks and financiers with direct ties to the community that want to lend in it. Because these groups know the real estate scene so well, they will usually make common sense decisions and don't immediately reject foreign national buyers. "Private" investors each have their own risk tolerance so expect mortgage terms to vary from source-to-source.
Choose your housing market wisely
Large cities like Miami, San Francisco and New York offer strong support for foreign national buyers. Big City "downtown" areas are typically:
- Abundant in private investor money
- Stable with respect to long-term housing trends
- Filled with loads of entry-level jobs (i.e. renters)
Smaller markets or vacation centers may introduce seasonal or local economy risks. Be sure to do your homework first.
Be prepared with a downpayment of at least 30 percent in U.S. dollars
Private investors are scared of foreign national buyers because the borrowers often live halfway around the world. In other words, there's no way to hold foreign national buyers accountable should their home loan go into default. Foreign national buyers should plan on putting a fair amount of their own money into their home purchase. 30 percent is the minimum in today's market and it carries the highest interest rates and harshest loan terms for foreign nationals. A 40 percent downpayment can soften the rates and terms, but it's at 50 percent where the real shift happens. With a 50 percent payment or more, foreign nationals get access to most attractive mortgage rates and very loose terms. This can include reduced documentation, reduced costs, and easier underwriting.
Above all else, make sure you work with professionals
The foreign national market changes very, very quickly in the United States and that's why every international buyer should be working with an experienced professional on both the real estate and mortgage part of the purchase.
At Alpine Mortgage, we specialize in providing foreign national mortgage loans. If you have any questions regarding foreign national loans or are interested in applying for one, call us now at (800) 876-LOAN or click here to have one of our foreign national loan specialists contact you.
If you are interested in applying for a foreign national mortgage, you can apply online now.