EVERYTHING YOU NEED TO KNOW ABOUT FINANCING

If you are thinking of buying a home in South Florida, whether as an investment, residence, vacation or permanent, it is important that you consider the possibilities you have of obtaining a mortgage loan. There are many financial institutions that offer loans, from local banks, online financial institutions, private lenders and large financial institutions in the United States. SOME INFLUENCING FACTORS TO DETERMINE INITIAL, TERM AND INTEREST RATES: • Your nationality • Legal status in the United States • If you have a credit history in the country • Your income and bank accounts Get a mortgage In South Florida, about 52% of buyers tend to pay in cash making the process much easier and faster, but with mortgage rates so low, (ranging between 4.5% - 6%) compared to those offered by their countries of origin, many choose to finance their purchase. Requirements to obtain a mortgage 1. Depending on the nationality of the buyer, a visa is required, all foreign buyers will have to present a copy of their passport with a valid tourist visa (B-1 or B-2). 2. At least 20% - 30% of the value of the home as a down payment in “Houses” 3. At least 30% - 50% of the home value as a down payment on “Condominiums and Townhouses” 4. Proof of income: ◦ Bank statements ◦ Letters of reference from your banking or credit institution ◦ Two forms of identification Other common requirements • Social Security number • Tax return • Form W2 • Account statement for the last 6 months • Proof of employment • Last 2 years of residence • Personal balance Loan costs The costs of obtaining a loan vary from institution to institution and from using a mortgage broker. We can use the following guidelines. • Direct with a local bank is usually cheaper, however, it will be limited to the specific products of that institution. • The use of a mortgage broker is very common and despite generally having a higher cost than going directly to a financial institution, you will have a much wider range of options. • Interest varies, among other things, based on credit history, monthly income, debt, and bank accounts. In the case of clients who do not have established credit, they will generally have a higher interest. • The initial varies according to: ◦ The type of property being acquired, ▪ House / Single Family Home: The initial is the lowest (10% - 20%) ▪ Townhouses: initial higher than houses (20% - 30%) ▪ Condominiums: It is the highest initial (40% - 50%) ◦ Nationality ◦ Foreigners without established credit in the USA, generally a minimum of 30% down payment is required and it increases according to the type of property that is acquired. What to do before applying for a loan? 1. Get your credit report BEFORE applying for the loan so that you have time to correct errors or problems in the history 2. Be clear about how much you can upfront (including closing costs) 3. Look for the best interest rate BUT take into account the other terms of the loan. 4. Compare quotes 5. Request a “good faith estimate” What NOT to do before applying for a loan? 1. Make "major" purchases through credit 2. Do not move important money from the accounts. 3. Apply for any type of loan (car, boat, credit cards, etc.) 4. Change your main place of residence 5. Open or close bank accounts How to estimate the total monthly payment when financing a property? The most important monthly expenses to calculate the total amount to pay are: • Mortgage • Insurance (flood, casualty, hurricanes) • Insurance against third parties (optional) • Condominium / expenses (maintenance fee / home owners association) • Property tax