Despite the world feeling more fractured than ever, foreign pur- chases of U.S. real estate are on the rise. Despite headlines about ravel bans and America-centric policies, immigrants have been purchasing U.S. real estate at a record pace. In the 12 months
ending this past March, international buyers spent approximately $153 billion to purchase an estimated 284,455 U.S. homes, according to data from the
National Association of Realtors.
This boom in U. S. purchases by foreign buyers isn’t occurring just in Florida
or California either. Boston, for example, offers world-renowned colleges and
hospitals, and some foreign nationals want to purchase a home there for
sons or daughters who are pursuing college degrees or completing medical internships or residencies. Others have worked in Boston themselves and
fallen in love with the city, so want to be able to visit and vacation there.
Other major American cities — both on the coasts and within the heartland, offer similar amenities and experiences that make them popular with
foreign nationals. Moreover, international buyers are making hefty offers
because of the perceived value and prestige of U.S. properties and the
higher prices and market volatility in their own countries.
Highly desirable borrowers
International borrowers are typically referred by Realtors, attorneys, financial advisers and certified public accountants (CPAs), but only if they know
you can provide foreign-national loan programs. As is always the case in the
mortgage industry, building strong relationships and trust are essential to
getting quality referrals.
Contrary to the stereotypes many believe, foreign national borrowers are
typically well-traveled, highly educated and affluent. They also can be among
the most humble, gracious and appreciative customers to work with. The
majority of these borrowers are extremely successful in their own countries,
with many being among their country’s “1 percent.” They may even have the
cash to buy a property outright, but with U.S. interest rates still at historic
lows, many view a mortgage as a better financial strategy.
With that said, loans to foreign nationals typically feature terms that are
desirable to lenders. It is standard for non-U.S. borrowers to make at least a
30 percent or more cash downpayment on a property. Many are good candidates for adjustable rate loans.
These borrowers also are a strong market for jumbo loans for those companies willing and able to finance them. Even a nonluxury property in Boston,
for example, can have a purchase price above $750,0000, making a jumbo
loan a necessity even for a borrower who can afford a 30 percent cash downpayment.
Even better, a positive loan experience can be just the beginning of a relationship that will continue to grow. Whether it’s opening an account from
which to pay their new mortgage or to make furniture or other purchases for
their new property, foreign nationals often become loyal, multichannel bank
customers with lucrative connections for future mortgage referrals.
Similar loan processes
Although the available records differ from country to country and some extra
layers of scrutiny are certainly required, the underlying approval process is
essentially the same for U.S. and international loan applicants. You need to
establish the identity and credit history of the borrowers, confirm the sources
of their income are legitimate and ongoing, and verify the quality of the asset
they are purchasing.
In addition, language is not as much of an obstacle as you might think. The
onus is on the borrower to provide any necessary paperwork you and the
underwriters may need, including paperwork that has been translated into
English. Many of these borrowers work with CPAs or other financial advisers
with the ability to generate documents in English or who have some English-speaking personnel.
Every international borrower is unique, however, so getting to know your
applicant is key, especially when it comes to minimizing risks. Depending on
their country of origin, culture and English proficiency, you should be prepared to fully explain the loan process and to repeat explaining the loan process. The same skills you use with other high-touch borrowers — patience,
empathy and flexibility in accommodating busy schedules — will serve you
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