How to buy a house in America if you live abroad


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If you are an international citizen and want to buy a home in the United States anytime soon, start the process early, especially when looking for a mortgage. As professional real estate agent Nabaraj KC says, “Think 10 times before you invest any money in the home. Look for the features you’ve always wanted, like the neighborhood and surroundings and the age of the property. “

The good news is, you don’t need to be a green card holder or a U.S. citizen. You can buy a home either directly on your behalf or through your business entity, such as an LLC. Foreigners don’t even have to travel here to close the deal. By using a power of attorney, you can authorize someone else to sign the closing document on your behalf and can secure a mortgage by paying 30-40% of the purchase price of the house as a down payment. Although you must obtain an Individual Tax Identification Number (ITIN) either from the Internal Revenue Service (IRS) or from a Chartered Professional Accountant (CPA) on the IRS approved list.

Here are some of the key steps needed to move from buying a home in the United States to closing the deal.

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Do your preliminary research

Think carefully about why you are going to buy a house in the United States. Will you be using it as a vacation home? Are you buying it for your kids who are studying at an American university? Or are you just buying this house for investment purposes? Obviously, depending on your goal, you will be looking at different types of houses and be prepared to spend different amounts. Once you’ve identified your goal, you can begin to analyze real estate listings online and in newspapers and other sources. This will give you a fair idea of ​​what is available within your budget. Over time, by observing price changes, you will also be able to identify market trends.

Apply for a mortgage

If you don’t have enough money to buy a home in the US ahead of time, the good news is, you don’t have to worry; you can pay a small amount of 5-20% of the purchase price as a deposit first. And for the remaining amount, you can take out a bank loan called a mortgage. However, to get mortgage loan approval quickly, you will need a strong credit rating and history.

To get an idea of ​​how much a bank will be willing to lend you, get prequalified with a lending bank. After reviewing your financial records, the lender will inform you of the maximum amount for which you are eligible. You should consider obtaining screening assessments from several banks and mortgage companies. Major mortgage lenders in the United States include Fannie Mae / Freddie Mac, Wells Fargo Mortgage, Bank of America, Chase Bank, Ally Bank, CitiMortgage, and US.

In addition to these mortgages, you should also find out about options for government guaranteed loans. Federal Housing Administration (FHA) loans are government insured mortgages. If you are unable to pay large down payments, FHA loans are perfect for you because you have to pay as little as 3% of the purchase price as a down payment. Similar to FHA loans, the United States Department of Agriculture offers loans that low-income people can use to buy a house in rural areas, and you can pay off the mortgage to the bank in monthly installments. .

The general rule is that the more installments you pay, the less amounts you have to pay for each. However, if you think you won’t be able to pay the installments for even the longest term of the mortgage, you should consider buying a large house and renting out the extra rooms.

You can also consider freelance work and other career opportunities to earn additional income. While the initial income from alternative sources may be minimal, your income will likely increase as you learn more skills through persistent effort. Stay motivated by recognizing that any additional income from these activities will not only help you pay off your mortgage, but also make you more balanced. Once you have found the best mortgage lender, you can get a prequalification letter from it by paying a nominal fee ranging from $ 40 to $ 50.

Find the right real estate agent

Unlike the practice in many other countries, the seller pays the commission to real estate agents in the United States. Therefore, buyers can use the services of agents for free. These agents have specialist and up-to-date knowledge of local properties and can be very helpful in finding the right property to suit your needs and budget. However, you should also be wary of the fact that realtors receive higher commissions if you pay more for a house.

You can find a good agent through recommendations from friends and family or by visiting sites like Realtor.com. You can also start working with multiple agents to compare their service levels. Once you have defined who will be your agent, you will begin to determine which homes meet your criteria.

Visit homes and ready offers

You can now begin to visit various homes identified by your agent. Take notes and photos of each house so you can share them with your friends and family for their opinion.

You should also check the operation of the various devices in each house. For example, run the shower to check the water pressure and how long it takes for it to heat up. Additionally, ask the homeowner to disclose any flaws in the home that they are aware of beforehand. Check the windows. Take notes on the size of the street so that you know if there is enough space available for visitors to park their cars, etc. How far are schools, shopping centers and hospitals? Take the time you need to find the home that meets all of your requirements.

Then consult your agent to find out how much you should offer the seller. It is very rare to meet at the listed price. Negotiate to get the best deal. If the agent has sold homes that are comparable in size to the current location, you can negotiate based on this data. It is important to note here that the bank or mortgage lender will not be willing to lend you more than the market rate or the actual value of the house, and you may have to pay the additional amount as a fee. initial or closing. Therefore, it is of the utmost importance that you do not accept any unfair value.

After a successful negotiation, you must make an offer by signing a contract. After signing, you and the seller are legally bound to complete the transaction. However, some contracts allow either party to opt out of the agreement.

Get a professional inspection

While you may have already thoroughly inspected the home on your own, you should arrange for a professional home inspection to assess any structural damage. Inspection reports also identify items that need to be repaired to restore them to their original condition or operational form. Inspection reports are given to both the seller and the potential buyer and can cost anywhere from $ 400 to $ 500. This cost is the buyer’s responsibility.

If the report reveals major structural damage, you can cancel your offer without any penalty. Conversely, if the house only needs minor repairs, you can ask the homeowner to do the repairs himself or you can adjust the cost through negotiation. If the owner agrees to make the repairs, finally be sure to inspect that all repairs have been made in accordance with the agreement. Your real estate agent will help you organize the inspection visit under specified conditions. Beware of such a mention in the contract; Otherwise, you might be surprised to find that a seller is no longer willing to abide by their terms.

Get a property appraisal from the bank or mortgage lender

After signing, you can approach the bank or mortgage lender to assess the value of the property without your involvement. However, the lender will charge you for the cost of this assessment, which will likely be $ 500 to $ 600. Lenders will usually add this cost to the closing costs or upfront fees.

You can also explore various mortgage options. Generally, there are two types: fixed rate mortgages and adjustable rate mortgages. Fixed rate mortgages usually have a period of 10 to 30 years to pay off the loan. The interest rate for this type of mortgage is high, but it remains fixed during the term of office. Fixed rate mortgages are great if you are risk averse and prefer security, stability, and fixed payments for repayment.

Variable rate mortgages charge a variable interest rate that is adjusted within predefined upper and lower limits. Usually, the interest rate on these mortgages is lower. However, make sure that if the interest rate hits the highest cap value, you will be able to make the required payments.

If you are buying a new home without selling a previous one, you should also explore your bridging financing options, in which lenders pay the loan to cover mortgages for both new and old homes, and you can repay the loan by selling your old house. Based on these characteristics, your personal preferences, and your particular situation, you can choose a mortgage that’s right for you.

Related: How to Buy a Home in the Ultra-Competitive California Bay Area Market

Secure property insurance and close the deal

Select an insurance agent and be aware that insurance fees and premiums are paid by lenders and lenders add these fees to closing costs. However, if you prefer, you can pay the insurance costs yourself.

As a final step in the closing, you will need to obtain the services of a property company that guarantees that the seller is the lawful owner of the building, that the property is free from litigation and that there is no pending lawsuits related to the property. . You will then ask the mortgage lender to transfer the money to the ownership company. After making the necessary verifications, the title company will proceed with the sale.

If this all sounds complicated, it doesn’t have to be, and it can go quickly and smoothly if you’re prepared. Happy house hunting!


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