International homebuyers have been pouring billions of dollars into the U.S. housing market as they take advantage of lower home prices and a weaker dollar.
But many foreigners find it difficult to navigate the complex homebuying process when living abroad — especially when they want a mortgage to finance the home.
Before getting in to the buying process, few points to be taken in consideration:
FIND THE RIGHT PEOPLE
They should start by finding the right professionals to guide them through the process, including a real estate agent and an attorney who are experienced in working with foreign homebuyers.
GETTING A MORTGAGE
When buying a home in the United States, foreign buyers often pay cash because it is a much easier, quicker process. But with mortgage rates so low, many international buyers opt to finance their purchase.
Few lenders in the United States offer home loans to foreign buyers, but this type of loan is available. It is just a matter of finding the right lender. A foreign buyer should expect to pay at least 30 percent of the value of the home as a down payment. The borrower will be asked to provide documentation to show sufficient income, bank statements, reference letters from their banking or credit institution, and two forms of identification
LENDING COSTS
Borrowers are required to establish a bank account in the United States and deposit the down payment into the account to be able to get a loan. Unlike online payday loans, long-term loans require credit check. Because of the nature of this type of loan, it is considered as a personal loan and may require collateral.
INSURANCE
Every lender in the United States will require borrowers to buy homeowners insurance to protect the home from any potential damage. Insurance costs vary depending on the size of the home and state. They tend to be costlier in areas prone to natural disasters, such as Florida.
PROPERTY TAXES
International buyers must consider property taxes when buying a home in the United States. The taxes vary by state and county, from a few hundred dollars to thousands of dollars a year, depending on the area and value of the property.
Title Decisions
Decisions as to how title is taken should be addressed beforehand. Title can be taken as an individual, a foreign corporation, a US corporation or trust, for example. In these and other matter it is advisable to seek out a competent accountant and or lawyer with international experience.
PROCEDURES:
1. Finding a suitable location – You should start the buying process researching possible locations, and finding an area that suits your strategy for investing overseas U.S. markets and financial means. Most probably, you won’t know the US as well as you know the UK property market, and thus taking the time to find out as much as you can, and getting advice from professionals is worth your time. If you are looking for a quick resale and have a large sum, you could be looking for properties in New York for example, whereas if you are planning to invest only a smaller amount, finding locations with BMV property deals and foreclosures can be a better decision for investing overseas U.S. markets.
2. Investment Strategy and Property Type – You’ll also have to decide the type of property you plan to invest in, and define your investment strategies and aims. Whether you are looking for residential real estate, commercial real estate, buy-to-let properties, holiday homes or foreclosure properties, you’ll surely find a suitable opportunity for investing overseas U.S. Markets real estate.
3. Financing & Costs – Considerations about financing your property investment is a further important step. Some investment properties, may only be available without the possibility of a mortgage. If you are taking out a mortgage, you could either raise the money on your existing property in the UK, or secure the mortgage against the property you are buying overseas. If you don’t have the money to be paid readily available, other financing options include taking out a loan or getting a cash lump sum through equity release based on the value of your property in the UK. You should also allow around 3% to 5% to cover any additional costs on top of the purchase price, such as the loan application fees, inspection fees, brokerage fees, title insurance and taxes.
4. Property Inspection & Survey – It is essential to have a property inspection before a contract is drawn up, so make sure to examine the property and use professional help for the property survey. Under US law, the buyer will have to accept the property in the condition before the deal is closed, and will not have the right to complain about major defects after the purchase is closed. If you want the seller to make any repairs, this should be included in the sales agreement.
5. Agreement of Sale – Once you’ve found the perfect investing overseas U.S. markets opportunity, you will make an offer. Your offer will be either accepted, or rejected, or the seller may also make a counter-offer. After the negotiation process, you’ll agree on the exact price, terms, and a closing date, and a contract will be drawn up. A closing date will also be established, which is the date by which all the duties and obligations contained in the contract must be satisfied. The closing date is usually set around 30 days from the signing of the contract.
6. Insurance – You should make sure before the closing date that insurance on the property is in place, which is crucial for effective risk management. Having title insurance on the property is also essential. This will protect the buyer if the title to a property is clouded, meaning that if another person or entity has an underlying interest in the real estate that was not disclosed during the process of sale.
7. Closing: Closing practices are dictated by custom, and vary from region to region. Generally, all necessary parties are present, their identity is verified, the documents are finalized, financial calculations and adjustments are reviewed and documents, money and information are exchanged. The closing usually takes place at the office of the seller´s attorney, but occasionally at the office of the lender’s counsel. Various costs are payable at closing, which vary according to jurisdiction. The purchaser typically pays fees to record the deed and the mortgage, utility bills, escrow fees, bank attorney’s fee, taxes, special assessments, financing charges, inspection fees, origination fees, adjustments and other fees that may be imposed by the state and local government
