The subject of real estate financing is one which is broad and complicated and as a potential client purchasing a property here in the states it is that much more complicated. Below are five basic things you should know about obtaining financing in today’s market. This is not the be all end all for US foreign national real estate fiance, but it is a good start…and we’re always here to answer any other questions you may have.
1) Keep an open mind…When considering purchasing property with financing, Canadian citizens had very, very few options. Options were limited to hard money, or equity lines of credit from their Canadian bank. This meant you were either going to pay an exorbitant rate or the opportunity to take a fairly drastic hit from the exchange rate was possible. Now the doors to US lenders has begun to open. Banks are seeing the potential for reliable returns from largely undeserved Canadian investors. This does nothing but benefit those investors looking to leverage US properties with a variety of different loan programs.
2) The paperwork can be overwhelming but…When a US citizen goes to get qualified for a bank loan it is a process that can be very labor intensive, and as a Canadian citizen now those same types of programs are being offered to you which means the document preparation is also the same. Banks want to lend to Canadians but they want to do it in safe way for both the client and themselves. Items such as tax returns,T-4’s, bank statements,pay stubs, are all going to be part of the requirement. The good news is we have a very knowledgeable team which is there to lead you down the path and make the process as painless as possible.
3) Disclose…Disclose…Disclose…This may seem like a very basic and honest principle but surprisingly does not happen as often as one would think. To be fair to the client; he or she is participating in an exercise which allows a strangers eyes to peer into very private areas of their lives, and the instinct to protect themselves does influence them. That being said, it can also be very painful for a borrower who is on the verge of closing a loan, and because they didn’t let the loan officer know they had a foreclosure four years back, they are being declined. Today’s lending market is one that is not nearly as rigid as some would lead you to believe. Lenders have options and guidelines to deal with almost every scenario a borrower can come up with. Banks want to lend their money, but they just want to do it in a smart way.
4)Work with someone you can trust…The real estate transaction itself can be a very impersonal experience. Clients who do not work for a mortgage company or don’t work in the real estate business on a daily basis can feel overwhelmed and under appreciated. The loan officer and Realtor choice can be two of the most important in deciding how smooth a transaction goes. The loan officers job is to make sure the client understands the choices he or she has and why they are or are not a benefit to them. Being comfortable with the person sitting next to you is a very important piece to the puzzle.
5)Know your goals…When buying a second home or a multi-family apartment complex it is very important to know what your goals are. Questions like…”am I looking long term or short term”…”Am I looking for income from the property or am I banking an increase in equity?” Once you feel you have the goal clearly on paper, let your loan officer know. The loan officer is there to be knowledgeable in a variety of products and bank options, and if they understand what you are trying to accomplish their recommendation become much more tailored to your needs.