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. Loans are offered by many financial institutions, from local banks, online financial institutions, private lenders, and large financial institutions in the United States.

SOME FACTORS THAT INFLUENCE TO DETERMINE INITIAL, TERMS 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

Getting a mortgage

In South Florida, about 52% of buyers usually pay in cash making the process much easier and faster, but with mortgage rates so low (ranging from 4.5% – 6%) compared to those offered in their home countries, 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 home’s value as a down payment on “Casas”
  3. At least 30% – 50% of the home’s value as a down payment on “Condominiums and Townhouses”
  4. Proof of income:
    • Bank statements
    • Reference letters from your bank or credit institution
    • Two forms of identification

Other common requirements

  • Social Security Number
  • Tax Return
  • Form W2
  • Bank statement for the last 6 months
  • Proof of employment
  • Last 2 years of residence
  • Personal Balance Sheet

Loan costs

The costs of obtaining a loan vary from institution to institution and from the use of a mortgage broker. We can use the following guidelines.

  • Direct with a local bank is usually cheaper, however, you 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 rates vary depending on credit history, monthly income, debt and bank accounts, among other things. 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,
      • Single-Family Home/Home: The initial is the lowest (10% – 20%)
      • Townhouses: initial higher than houses (20% – 30%)
      • Condominiums: It is the largest initial (40% – 50%)
    • Nationality
    • Foreigners without established credit in the USA, a minimum of 30% down payment is generally 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 you apply for the loan so you have time to correct errors or problems in your history
  2. Be clear about how much you can put down (including closing costs)
  3. Shop for the best interest rate BUT keep in mind the other terms of the loan.
  4. Compare quotes
  5. Ask for a “good faith estimate”

What NOT to do before applying for a loan?

  1. Make “larger” purchases through credit
  2. Do not move important money from accounts.
  3. Apply for any type of loan (car, boat, credit card, etc.)
  4. Change your primary 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 be paid are:

  • Mortgage
  • Insurance (flood, casualty, hurricane)
  • Third party insurance (optional)
  • Condominium/expenses (maintenance fee / home owners association)
  • Property taxes