As property prices have reduced drastically, a large number of international homebuyers are ready to pour billions of dollars into the U.S. housing market. The international buyers want to take advantage of lower home prices as well as weaker dollar. But the home buying process is different in U.S. compared to other countries.
Here is a step by step description which will help foreigners to buy homes in the U.S.:
Contact the right people:
In order to get qualified for a mortgage and buy a property in the foreign land, one needs to get in touch with the right people. Right professionals such as a real estate agent, real estate attorney, mortgage broker, etc. will guide them through the process to guide them through the process. You need to go for those real estate agents who are "international property specialists". You can go for referrals in order to find out the best real estate agent. Apart from this, you can even go by the word of mouth as well as Google searches.
Taking out a mortgage:
When buying a home in the United States, foreign buyers often pay cash because it's a much easier, quicker process. But as the rates are now going extremely low, many international buyers prefer taking out a mortgage. Recently, it has been noticed that a large number of borrowers from Brazil and the United Kingdom apply for mortgages in the United States. However, it is true that there are very few lenders who offer loans to international borrowers.
Criteria to get mortgages:
A foreign buyer will have to pay at least 30% of the property value as a down payment in order to get a mortgage. In order to get a loan in United States, the foreign borrowers will have to establish a bank account here. They will have to deposit the down payment in that account in order to get the mortgage. Apart from this, the borrowers 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. The lender will also conduct a detailed review of the borrower's income and asset documentation.
Cost of lending:
International borrowers are charged higher interest rates than the local residents. Mortgages are commonly available with fixed rates for a period of five, seven, 15 and 30 years. Foreign borrowers are charged closing costs, lender fees and third-party fees. Total closing costs vary, but it's typically about 2 percent of the loan amount.
Homeowners Insurance:
Every lender in the United States will require international borrowers to buy homeowners insurance. This insurance will be of great help to protect the home from any potential damage. Insurance costs vary depending on the size of the home and state. Homeowners insurance is costlier in localities prone to natural disasters. For example, in Florida, the cost of home insurance is higher.
Property taxes:
International buyers must give due importance to the property taxes when buying a home in the United States. The property taxes will vary from one state to another and may even chance on a yearly basis. Also, depending on the buyer's nationality, the property taxes in the United States can be perceived as high.