All about mortgage

Real estate in the United States of America can be purchased on credit. The interest rate on mortgages in the United States is lower than in Russian banks. But for foreigners, American lenders have special credit conditions.

Conditions for obtaining a mortgage in the US

In America, there are two mortgage lending programs for foreigners.

The first program – without the requirement of confirming your income. Without personal involvement.

Basic provisions and requirements:

1. Down payment:

  • – with a loan of up to $ 1 million – 10%;
  • – from $ 1 million – 20%.

2.  Interest rate – up to 7.5% per annum; 
3. Loan term – up to 30 years; 
4. Commission to the bank (which the seller can also pay) – 10% of the total loan amount; 
5. You do not enter  into a property insurance contract ; 
6. It is possible to repay the loan in full without any penalties after six months from the moment of receiving the loan; 
7. You can get a mortgage loan for all types of real estate in any state of the USA, except for the states of Hawaii and Alaska. 
8. For the conclusion of the transaction you will need a passport and a US visa.

To make a mortgage transaction without your personal presence, issue a power of attorney to an authorized realtor at a US consulate. All transaction costs will be paid from a special trust account that you open before a transaction at any international bank in Russia.

Documents on the credit transaction, insurance contracts and sales contracts are sent to you by express mail. In the presence of the US consul, you sign the paper and send it back to the brokerage agency.

The second program – with documents confirming your solvency

To purchase a home abroad, all the documents required by the bank will need to be translated into English. Your presence at the conclusion of a transaction for a mortgage loan in this case is mandatory. 
Basic requirements: 
1. Entry fee: 
– with a loan of up to $ 750 thousand – 30%; 
– up to $ 1 million – 35%; 
– from $ 1 million – 40%. 
2. The interest rate on the loan – 5-5.25% per annum. It is fixed for 3-5 years of mortgage servicing, after – it may change annually depending on the policy of the bank; 
3. Commission to the bank – 3% of the loan amount; 
4. Loan term – up to 30 years; 
5. It is possible to repay the loan in full without any penalties after six months from the moment of receiving the loan;
6. Mandatory conclusion of a property insurance contract for the full assessed cost of housing; 
7. Before receiving a loan, the borrower opens an account in a US bank and lays on it an amount equal to 12 monthly loan payments.

Basic package of documents

  • international passport. The alternative is a social security card or American driver’s license;
  • information about income. Tax returns for the last two years, a letter from an independent (private) accountant about the status of your income. You must explain the source of your money;
  • account statement in a bank in the USA or Russia, where the money for the initial payment on the mortgage. They must be on the bill for at least three months; 
  • credit history confirmation. In Russia, such a document could be a letter from the CII;
  • documents that would confirm the presence of expensive property in your personal property (documents on privatization, contracts of sale, certificate of registration of property rights, etc.); 
  • contract for the purchase of real estate with the United States.

How to get a mortgage in the US: instructions

US law does not restrict foreigners to purchase residential or commercial real estate in the country, so you will not need any additional agreements.

For successful implementation follow the sequence of actions: 

1. Choose a property. 
2. Sign a service agreement with a  mortgage broker (realtor) in the United States. 
3. Sign the contract of sale with the seller. Make a deposit of 1-5% of the value of the property at the expense of the broker. 
4. Submit documents to the bank. 
5. If the bank agrees to the loan, you receive a written commitment to issue a loan from a financial institution. 
6. Sign a loan and mortgage agreement with the bank. The money is transferred by the bank to the seller’s account. 
7. Register the real estate documents in your name in the district court of the state where you purchased housing; 
8. After you have received the original documents in your hands, consider that the mortgage transaction is completed.

Tips for future borrowers

  • Preparation of documents for the bank is an important point, so you or your trusted broker should take this seriously.
  • If you do not have time to collect all references, you can get by with a minimum package of documents, but at the same time the percentage of mortgages in the United States will be higher.
  • Before making a transaction with the purchase of real estate be sure to consult about all the expenses that you will incur (including state or other taxes and fees).

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