International Clients

Foreign National (FN) loans are loans granted to non US citizens, to help them buy residential property in USA. The lenders in this marketplace will usually lend to four groups of people:

1. Financing of a Primary Residence, which is granted to FN’s who have a Visa allowing them to work in the USA, but who are not US Citizens.
2. Financing of a Secondary Residence, which is granted to FN’s who want to purchase a Vacation Home in the sun. ie they will not rent the property out, but keep the property for their own private use.
3. Financing of an Investment Property, which is granted to FN’s who want to purchase a residential property with the specific aim of renting the property out, either short term or long term. 
4. Financing of a Commercial Investment Property, which is granted to FN’s who want to buy Commercial Real Estate for investment purposes.

The process of establishing which lender is right for you will take into account:

1. Which of the four loan types described above do you require?
2. Your personal circumstances, eg how much deposit do you have, what is your income and credit history in your home country? 
3. What closing times frames you have, ie how quickly do you need to complete?
4. The flexibility/inflexibility of the lenders process….some lenders have a very rigid process, eg some lenders insist that you fly over for the closing process, others will allow closing documents to be emailed to you in your home country.

For the purposes of this section, I have assumed that you and your Realtor will have done some due diligence on what areas and property types are likely to be right for you. You have isolated a property you would like to make an offer, however you won’t be able to make an offer because the seller will want to see proof that you can purchase:

The lending process starts here:

1. You will need to secure a Pre-qualification letter prior to making an offer on any property. Get Pre-qualified
2. Your offer is accepted and you have signed contracts…always ensure that your contract is written on the basis that it is ‘contingent’ on the loan being approved as this will ensure that you get your escrow deposit back if the loan can’t be granted.
3. Gather all supporting information for the loan. (View the Checklist Tab Above)
4. Receive legal ‘disclosures’ including a Good Faith Estimate of estimated closing costs.
5. The lender gives preliminary decision and will either give initial approval and order the Appraisal (property valuation), or they may decline or request additional supporting information.
6. Once the lender has received the additional information requested and the appraisal has been done, the ender will review the entire file and confirm that they will approve your loan or not. They will produce a letter of approval, which will either be conditional on some simple additional information or give a non-conditional approval, which essentially means that your file is complete. A typical condition at this stage is that they need to see adequate buildings insurance cover…we will then get quotes and cover arranged.
7. As soon as the lender has all of the supporting information and the appraisal is fine, the loan will go to the lenders ‘closing department’, where the mortgage documents are prepared.
8. Having prepared the mortgage documents, they will send these to the Title Company, who will handle the closing process. They will prepare the Legal Documents and together with the Mortgage documents, the Title company will have the closing package.
9. One of the closing documents the Title Company will prepare will be the HUD 1 document. This document shows all of the financial details of the contract, all credits, all costs and any amount still left to be deposited with the Title Company in order to close. The HUD 1 is the closing Cash Flow document and will be emailed to you a day or two before closing. The HUD 1 will be checked and agreed by you, the lender and the seller.
10. Once approved and closing balance of cash has been deposited with the Title company, the transaction is ready to ‘close’.
11. Closing takes place when all documents are signed by all parties and notarized. The process for this will depend upon the individual lenders. After closing the Title company is responsible for the disbursement of the proceeds, eg funds to the seller, insurance costs to the insurance company, taxes to the tax office etc.

The process outlined above is fairly simplistic as you will discover when you enter the process. 

Our aims throughout the process are:

1. To guide you through the process step by step
2. To explain any documents that you don’t understand in the process.
3. To provide you with updates throughout the process.

Conventional Loans:

Deposit: 35% minimum, based on the purchase price.

Closing Costs: circa 4% plus circa 2% for pre-paid property taxes and the first years house insurance.

Repayment: Interest Only available with a deposit of 40%.

Minimum Loan: $100,000

Property Types: Villas and Townhomes, Condo’s but not Condo-hotels. The distinction 

between condo and condo-hotel is fairly complex, so please contact us 

and we can help you assess whether the property you are buying is a 

condo or a condo-hotel.

Number of properties: One property.

Affordability: US lenders use a Debt/Income calculation to assess affordability. 

Income must be from verifiable sources and the debt ratios for 

housing costs alone is 35%, with an overall debt ratio of no more than 

45%. 

Documentation: Must be in English, if not, all documents must be translated by a 

Certified translator.

Reserves: At closing, aside from closing costs, you must show reserves 

equivalent to 24 months PITI (Loan Principle, Interest, Taxes and 

Insurance). 12 months of this needs to be in your US bank account and 

12 months can be shown in your home country.

Non Conventional Loans (Hard Money):

Deposit: 45% minimum, based on appraised value, rather than purchase price.

Closing costs: 6-8%

Property types: All types considered, including multiple purchases.

Affordability: not applicable.

Documentation: Must be in English, if not, all documents must be translated by a 

Certified translator.

Reserves: none required.

The rates are dependent upon the lender, but will range from circa 3.9% for a 5/1 ARM (fixed 5 yrs then reverts to Adjustable Rate Mortgage) to around 5.8% for a 30 yr fix.

Non Conventional Loans (Hard Money):

The rates tend to be much higher to reflect the fact that these loans are ‘asset based’ loans rather than fully underwritten loans, like conventional loans. You can expect to pay rates between 8% and 11% for this type of facility.

Closing Timeframes:

Conventional Loans:

Conventional Loan lenders are closing in around 45 to 60 days depending upon lender. This needs to be taken into account when negotiating the closing timeframes within your purchase contract.

Non Conventional Loans (Hard Money):

It is technically possible for a Hard Money Lender to close a mortgage loan within 24 hours, however a realistic timeframe is between 14 to 21 days.