SiMaMa

By: Martin Sejas
l Estate Financing has experienced quite a dip lately. With the US economy struggling, and banks tightening their requirements, the ability for foreign investors to secure a loan has gotten much tougher.

Due to the US credit crisis, the facts show that cash deals have become more prominent in the last year for purchasing US real estate for non US residents. Fortunately, lenders are slowly beginning to relax their requirements in tandem with the slow recovery of the economy.

If you are considering getting a loan for US real estate, here's what the current process involves.

Amount Financed

Unlike loans offered to US residents, foreign investors are usually only allowed to finance 70%, or less, of a homes value. In addition to a sizeable down payment, interest rates and fees are also generally a little higher.

Property Usage

You?ll get better terms (more competitive rates and lower down payment) if your purchase is to be used as a second home rather than a rental property.

Property Ownership

Typically, banks are more receptive to lending to foreign individuals than to foreign corporations.

Credit Worthiness

Banks rely heavily on your credit history for US Real Estate Financing. Given that many investors don't have a history with American companies, it is wise to have at least 3 creditors that can present proof of timely payments. It's also a good idea to use letters from institutions to demonstrate your credit worthiness, which may also be acceptable.

Asset Verification

This may not be required to obtain a loan but it can help you get better rates or less of a down payment. The best asset verification comes from international banking institutions who can verify the amount you have on deposit and the amount of time your account has been active.

Property Chosen

You may have exemplary credit and still get tur

ned down for a loan. This is because the banks look closely at the type of property you?re investing in as well. For example, there are many banks that would not consider lending money on property that is already heavily controlled and owned on investors. They think that this will only increase the chances of a default and as a result, they are not willing to take the chance. Similarly, many banks won?t lend on property that is not yet built, as there is the risk that the project will never sell enough units to reach completion.

For foreign investors, the reason why the US real estate market is appealing is because it represents a low-risk and high-profit option. Even if you don't have any cash on you, US real estate financing still represents a great alternative to gain access to this valuable market.