The United States of America allows foreign nationals to purchase real estate in the country through Foreign National Loans. Lending institutions in areas with high immigration rates offer a variety of mortgage programs aimed at foreign nationals. Read on to find out everything that you need to know about real estate mortgage for foreign nationals and alienated residents.
Who is a foreign national?
For the purpose of Foreign National Loans, a foreign national is an individual who is not a citizen or legal resident of USA but of another country. Their source of income and traditional line of credit may be situated in a different country. Immigrants with work visas except the B- 1 and B-2 visa may also be eligible for Foreign Nationals Mortgage. Resident aliens who were originally US citizens but now live in another country are also eligible for these loans. A foreign national may purchase a US home to either use for short-term basis (like for vacations or business trips) or to invest in real estate.
Foreign National Loans: Down Payments and Interest Rates
When these loans first gained momentum circa 1995, lenders asked for 40% down payment and charged 9-10% per interest annum. At the turn of the century, majority of lenders slashed down payments to 20% and interest rates to 5-6% per annum. Today, most Foreign National Loans will finance 70% of the cost with some lenders offering 80% to even 97% financing for certain visa holders.
The Process of Obtaining a Foreign Nationals Loan
The applicant approaches and finalizes loan details with a lender. This is followed by filling out the1003 application form which asks for the borrower and co-borrower’s name, income information, assets and liabilities, and transaction details (total price, down payment, interest rate). The applicant has to attach a copy of the ratified contract with the lender, an income proof (a letter of employment from the employment), an identity proof (passport, or US visa), proof of assets (usually a bank statement showing a reserve of 12 months worth of principal, interest taxes, and insurance. In some cases, the applicant may need to attach credit reports with the application form but usually, three credit references suffice. The entire process takes one to two months to complete.
Types of Foreign National Loans
Most popular type of these loans are fixed rate loans with the same monthly payment stretched out over a period to cover the principal and the interest. In variable rate loans, a period of fixed monthly payments if followed by payments calculated at a different rate of interest that changes every 6 or 12 months. In equity builder mortgage, payments are made on a biweekly basis. There are many special case loans like the balloon or piggy back loans that use a complex repayment structure.
National Association of Realtors reports that foreign nationals purchased around $68.2 million worth of residential real estate in the USA between April 2012 and March 2013. After fizzling out circa 2006, Foreign National Loans are back. If you considering a real estate opportunity in the USA but aren’t a legal resident or citizen, call in to get a quote today; this is the best time for foreign nationals to invest in US real estate market.