Many
Americans dream of owning a home overseas, particularly since real
estate markets abroad often fair better when American markets begin to
plummet. Whether you're interested in investing in a home in another
country or you are looking for a vacation property, securing a mortgage
for a home overseas can be tricky.
Most American mortgage lenders
will balk at the idea of financing a home overseas because they have
very little recourse should you default on the loan. Some mortgage
companies advertise that the specialize in mortgages abroad, but you
have to be careful about these lenders because the interest rates can be
exorbitant. Scammers have infected the American real estate market, so
be careful about doing business with a lender you don't know.
There are a few legitimate American lenders who finance homes in Canada and Mexico, while a few others specialize in homes in South America. IMI Group in Phoenix, AZ is one example (imigrou.us), and Collateral International (collateralinternational.com), in Birmingham, AL, is another. If you work with an upstanding institution that specializes specifically in securing mortgages for overseas homes, you stand a better chance of getting a favorable interest rate.
It is also possible to find a mortgage company in the overseas country where you plan to purchase a home. Some financial institutions are more than happy to work with Americans. This might take several extra hours of research as you talk with potential lenders in other countries---not to mention the ridiculous long-distance bill---but it can be worth it if you are serious about buying a home overseas.
Unfortunately, however, mortgage lenders in other countries typically expect shorter mortgage lifespans. While a thirty-year mortgage isn't uncommon in the States, five years is often the maximum abroad. You must be able to pay the house off in your current financial position in just a few years if you want to take this route. They might also expect higher down payments, often in excess of 50% up front.
Another option you have with securing a mortgage for a home overseas is to find properties that offer seller financing, which means that you purchase the house directly form the seller and work out a mortgage arrangement between the two of you. This is more common overseas than it is here in the States, and the interest rates might be much lower. Beware predatory sellers, however, and make sure you have an attorney look over the contract before you sign it.
And finally, the most attractive option when buying a home overseas is often to purchase the property outright. If you have sufficient financial resources to pay for the house up front, you can avoid higher interest rates and complicated mortgage contracts altogether. Home owners in some countries---such as those in South and Latin America---are willing to knock a substantial amount off the price for buyers who are willing to pay cash.
There are a few legitimate American lenders who finance homes in Canada and Mexico, while a few others specialize in homes in South America. IMI Group in Phoenix, AZ is one example (imigrou.us), and Collateral International (collateralinternational.com), in Birmingham, AL, is another. If you work with an upstanding institution that specializes specifically in securing mortgages for overseas homes, you stand a better chance of getting a favorable interest rate.
It is also possible to find a mortgage company in the overseas country where you plan to purchase a home. Some financial institutions are more than happy to work with Americans. This might take several extra hours of research as you talk with potential lenders in other countries---not to mention the ridiculous long-distance bill---but it can be worth it if you are serious about buying a home overseas.
Unfortunately, however, mortgage lenders in other countries typically expect shorter mortgage lifespans. While a thirty-year mortgage isn't uncommon in the States, five years is often the maximum abroad. You must be able to pay the house off in your current financial position in just a few years if you want to take this route. They might also expect higher down payments, often in excess of 50% up front.
Another option you have with securing a mortgage for a home overseas is to find properties that offer seller financing, which means that you purchase the house directly form the seller and work out a mortgage arrangement between the two of you. This is more common overseas than it is here in the States, and the interest rates might be much lower. Beware predatory sellers, however, and make sure you have an attorney look over the contract before you sign it.
And finally, the most attractive option when buying a home overseas is often to purchase the property outright. If you have sufficient financial resources to pay for the house up front, you can avoid higher interest rates and complicated mortgage contracts altogether. Home owners in some countries---such as those in South and Latin America---are willing to knock a substantial amount off the price for buyers who are willing to pay cash.
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