Tuesday, February 12, 2019

Mortgage in the US: is it possible to get a home loan to a foreigner?

One of the most attractive countries for work and residence is the United States of America. Is it possible to settle here for a visitor, get a loan for the purchase of housing, a car and open your own business?
Own home or apartment is one of the basic goals of any family. However, most people cannot afford to purchase housing without the involvement of banks or other financial organizations.

The United States of America is one of the most profitable countries in the world for a mortgage loan. The local population is absolutely normal about “living in debt” since interest rates on any type of lending are minimal here.

What to do if you want to buy a house in the US

Having made a decision about buying a home, but not being able to pay its full value immediately, you need to contact the bank. Trust loan for the purchase of real estate is issued on the security of this property. The status of the house, in this case, will be publicly promulgated in specialized publications and included in the register of rights to real estate. In fact, such a house will belong to the bank or financial organization that allocated the loan, until the entire amount and interest are paid.

The average cost of a house with 2-3 bedrooms in the United States varies from $ 70,000 to $ 260,000, depending on the state and the material from which it is built (stone and brick are 20-30% more expensive than wood and frame). For an ordinary citizen, this amount seems quite real, but most people do not want to immediately part with most of their savings or begin to save money on life.

Therefore, they prefer a mortgage for a period of 10, 15 and 30 years. This mode of payment allows you not to worry about the monthly payments, as they constitute from 10 to 20% of family income. Of course, in this case, the cost of the house for the borrower increases and as a result, for the initial $ 100,000, you will have to pay twice as much after 30 years.

However, there are several nuances that allow US citizens to pay smaller amounts:

  • high competition with banks and other financial institutions that provide loans gives a chance to get quite favorable loan terms, bonuses for interest payments on time, etc .;
  • banks' loyalty to the early repayment of loans;
  • the opportunity to get a preferential mortgage for veterans, people with disabilities affected by various natural disasters, representatives of certain groups of professions, etc .;
  • banks willingly provide funds for the purchase of both housings in the secondary market and in the primary market. There is no risk that the house under construction will not be completed or not put into operation on time, as the state takes an active part in insurance of such projects;
  • the opportunity to take a loan from another bank on more favorable terms for early repayment of the mortgage (refinancing).

Types of mortgage lending in the United States

There are two main types of mortgage loans - fixed and floating rates. A fixed rate is always higher than floating, but less risky for long-term loans since you will always pay the same amount.

The floating rate is usually 30-40% lower, but it is rigidly tied to the economic situation in the country, stock markets, and exchange rates, so it can be beneficial only for short-term loans or early repayment.

Mortgage for foreigners in the US

Citizens of foreign countries, US banks also provide loans, but on more stringent conditions. So, if a US citizen issues a loan, then the initial payment for him is minimal (about 10% of the total amount) or not necessary at all. A foreigner will have to pay immediately up to 30-40% of the total amount. Agree, it is essential.

If for local the average interest rate ranges from 2.85 to 4.5%, then the loan is provided to foreigners at 7-10%. Also, the procedure itself will take much longer and more difficult. For example, you will need a letter of recommendation from your bank in your home country and data on an account opened no later than two years ago. There should be an amount of 12 of your monthly income.

You also need a bank account in the United States with the amount of the initial payment, the amount of insurance and reserve, which is at least 12 monthly mortgage repayments and the full cost of loan processing services. On average, if you have an open working or other US visa, a loan for foreigners is at least 45 days.

It is extremely reluctant to local banks to lend to citizens of the CIS because this is associated with many precedents of defaults, late repayment, and fraud. Also, not all of our compatriots have a stable income, sufficient to fulfill all the conditions of mortgage lending for foreigners.

These are just some of the most important aspects of the issue of mortgage lending in the United States, but they will help you create your impression and understand whether lending is beneficial for citizens of other countries (for example, the CIS countries) in America.