As most people know, there are been an uproar in the US mortgage market of late. It is often referred to as the subprime problem. However it extends to much more than the subprime market. As a foreign national looking to buy or potentially remortgage in their US property, here is what you need to know about what is happening and how it may impact you. In the US, it is common for lenders to package their loans into a financial vehicle called a derivative and sell these to investors. This provides an investor with essentially a mortgage backed bond that receives the monthly payments as their dividends. And it provides new capital to the lender so they can offer additional mortgages. In short it provides liquidity to the mortgage market keeping prices (interest rates) down. Recently many of the buyers in the secondary market for mortgage backed securities have stopped buying these loans for fear they were buying subprime loans. With this liquidity temporarily frozen, there were several fallout events. Many lenders were caught in a cash crunch causing them to go bankrupt. For the lenders who were able to stay in business, they had access to much less capital. This meant the supply of loans is significantly less and hence the interest rates have gone up. The loans most severely impacted are the jumbo loans which in the US are loans larger than $417,000. Regionally there have also been some pullback in housing prices for a variety of reasons I won’t list here. This pull back in prices along with higher rates has caused a large number of foreclosures and a balloon in the number of homes on the market. A separate event that has impacted the US housing market for foreign nationals is the fall of the value of the US dollar. The Pound is over $2.06 and the Euro is $1.43 making investments in the US look cheap. How does this impact you? With a strong currency and lower US prices, now is the ideal time to make an investment in US property. However you need to understand what your mortgage options are. First lets discuss the common lending requirements for foreign nationals. Typically foreign nationals require at least the following:

• 20% deposit
• Ability to document your income and assets (paystubs, bank statements, tax returns)
• Valid passport

However with higher deposits (25% – 35%), you may be able to qualify for a loan with these options:

• Lower interest rates
• Stated Income (self employed)
• Stated Asset
• Jumbo loans (larger than $417k)
• Rental property (to let)
• Multiple homes

While the number of lenders to foreign nationals has been reduced, loans are still available. If your loan size is below $417k, and you have the first list above, you will not have any trouble getting a loan at a competitive rate. If your loan is over $417k or you are self employed or just started a job that is commission based or relies heavily on bonuses that are not in an employment contract, you will need to put down a larger deposit but there are still some options available.

For questions about your specific needs, financing options, the purchase process, or to get prequalified for US loan, give us a call today.

USA Bound

http://www.usa-bound.com/ 321-251-7904