One of the most difficult aspects of buying real estate in another country is raising the necessary funds to complete the transaction.
Finance is difficult to organize in many parts of the world. Foreign purchasers may not be able to obtain finance in some areas.
That isn’t to argue that raising funds in a foreign country is impossible. In truth, you can borrow money to finance real estate investment in the United States.
If you are looking to buy a home in the United States, there’s a good chance you will be able to finance it with a local mortgage.
You may pay a fixed interest rate and a specific amount as a down payment 30% – 40%, or even 50% of the property’s worth.
This could be a deal-breaker depending on where you live and how old you are, as some jurisdictions have upper age limits on who can get life insurance.
Since mortgages generally aren’t available to U.S. buyers offshore and most U.S. banks won’t lend for purchases abroad what are some alternatives if you want to buy a home in the United States?
Depending on where you are buying, you may have three alternatives when buying real estate in the United States.
This is the least likely scenario, because finance is not readily available in most parts of the world, and certainly not in the quantities or on the conditions that are usual in the United States.
Even if bank financing is available in a country, bank financing for buyers outside the United States may be restricted.
When it is available, however, bank financing may be the best alternative.
Foreign bank funding is divided into two categories: finance for inhabitants of the country in which the bank operates and financing for non-residents.
Most banks will treat your loan application as if you were a citizen if you are a legal resident.
This implies that, just like a local person, you will need to demonstrate sufficient income to qualify for the loan (and just as you would need to do with a U.S. bank).
Depending on the bank’s policies, different types of income will be required and accepted. This is something we do discuss with the bank in detail.
If you buy a lot, home site, or pre-construction property in a development, you may be eligible for developer financing, depending on your state.
There is usually no paperwork involved with developer financing, and there are no age limitations or life insurance requirements.
Another advantage is that developer financing is sometimes interest-free.
You make payments on predetermined dates with one sort of developer financing, such as 10% when you sign the purchase agreement, 10% after six months, another 10% after 12 months, and the balance when the project is completed.
Instead of predetermined dates, another option allows you to pay according to building stages, such as a 10% down payment, 20% when the foundation is complete, 20% when the first floor is ready, and so on.
Read also: REAL ESTATE INVESTMENT IN UNITED STATE
Some private sellers may agree to finance a portion of the purchase price. The conditions will be as agreed upon by you and the seller, with a normal length of up to five years.
In general, the longer a home has been on the market, the better the conditions you will be able to negotiate. Expect the seller to hold the deed until you have paid off the debt, just like with bank financing.
The Bottom Line
When buying a home in the United States, it is critical to ensure that the transaction is performed in a way that protects your property rights. Homebuyers in the United States obtain title to the property, although this distinction is not made in every country.
Consult a skilled real estate agent and an attorney to ensure that the process runs smoothly, that your property rights are preserved, and that all required paperwork is completed.
The Foreign Investor Program was created by Luvanex Realty Group.
Our goal is to open up the real estate investment landscape in the United States to more foreign investors in Africa, Asia and other parts of the World by providing the ease of doing business in one of the most prestigious markets in the World.
Prior to this day and age, Luvanex Realty served and is still serving international investors from various countries including Nigeria, Ethiopia, South Africa, Kenya, Ghana, India, China, Jamaica, Colombia and a few others.
These investors had to purchase their properties in cash (no financing) primarily because they had no formal ties (such as citizenship or residency status) in the United States of America.
With the launch of this program, we hope to redefine the way international investors do business in SouthEastern region of the United States of America,
Get more information about our Foreign Investors Program started right away.