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Frequently Asked Questions
- What does the MAP Program finance? The Mortgage Alliance Program (MAP) provides loan coordination services for both real estate purchasers and lenders that provide financing for finished housing, construction and lot loans.
- Is developer financing available? No, the Mortgage Alliance Program (MAP) does not provide commercial financing; it is of a residential nature.
- Who is eligible for this program? The Mortgage Alliance Program (MAP) provides financing solutions for residents of the United States, Canada and the United Kingdom. Applications from other European countries can be reviewed on an individual basis.
- Who will provide the funds for the loan? Funds are provided by lender selected as the best option for your needs. This may be a US or a local lender.
- Can I finance more than one property? Most lenders will only allow you to finance one property. This is due to the fact that the program is a first/second home program. Situations where more than one property will be financed can be reviewed on a case by case basis.
- How long does it take to close the loan? Response time is based from the moment that you submit the complete Loan Package and upfront fees to the day the loan closes and funds are disbursed. Average times are:
- Costa Rica 30 to 45 days
- Dominican Republic 30 to 45 days
- Mexico 60 to 90 days
- How can I submit my application? Applications can be submitted online (see the Apply Now section) or via e-mail.
- What is the role of the Mortgage Alliance Program (MAP)? MAP will serve as your point of contact throughout the whole process. MAP aims to be the liaison between lenders and borrowers for efficiently coordinating the financing process in Costa Rica, Dominican Republic and Mexico. Our mortgage specialists will supervise every step, from the moment you call to inquire about financing, until closing takes place.
- Is the property in country taken as collateral? Yes
- What are the closing costs? Closing costs will vary depending on the lender and the country. Your MAP representative will send you a Good Faith Estimate (GFE) along with your pre-approval form. This will give you a very clear estimate of the actual closings costs.
- What documents are used to apply? The documents are the same ones used in the United States. Your MAP representative will send you the loan package, which contains a checklist of the forms and supporting information required.
- Is a credit report pulled? What is the minimum score to qualify? Yes, we will pull a Tri-Merge Credit Report (From all Credit Bureaus) to process your application. The minimum credit score starts at 680.
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What is a FICO score? A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower's credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit-bureau models are developed from information in consumer credit bureau reports.
- What are the main requirements to be approved?
- 680 or higher Fico Score
- 40% Back Ratio
- Capacity to put 25% down payment (Minimum)
- Do I have to be present at closing? Yes, you will have to attend closing. If you are not going to be able to attend, your MAP representative would have to request an exception to the lender to consider the possibility of issuing a Power of Attorney (POA) to have somebody sign on your behalf. This will imply additional costs, as an attorney would have to travel to your location to draft the POA and have you sign it.
- What interest rates are available? The annual interest rate (APR) will depend mainly on the country where you are purchasing and the type of loan (Finished Housing, Construction or Lot loan). Other factors that will also determine the interest rate are your credit score and loan amount. Annual Interest Rates will range from 7.50% to 11.00%.
- Why do the interest rates change? Interest rate movements are based on the simple concept of supply and demand. If the demand for credit (loans) increases, so do interest rates. This is because there are more buyers, so sellers can command a better price, i.e. higher rates. If the demand for credit reduces, then so do interest rates. This is because there are more sellers than buyers, so buyers can command a lower better price, i.e. lower rates. When the economy is expanding there is a higher demand for credit, so rates move higher, whereas when the economy is slowing the demand for credit decreases and so do interest rates. A major factor driving interest rates is inflation. Higher inflation is associated with a growing economy. When the economy grows too strongly, the Federal Reserve increases interest rates to slow the economy down and reduce inflation. Inflation results from prices of goods and services increasing. When the economy is strong, there is more demand for goods and services, so the producers of those goods and services can increase prices. A strong economy therefore results in higher real-estate prices, higher rents on apartments and higher mortgage rates. Mortgage rates tend to move in the same direction as interest rates. However, actual mortgage rates are also based on supply and demand for mortgages. The supply/demand equation for mortgage rates may be different from the supply/demand equation for interest rates. This might sometimes result in mortgage rates moving differently from other rates. For example, one lender may be forced to close additional mortgages to meet a commitment they have made. This results in them offering lower rates even though interest rates may have moved up!
- What happens if the rates change? If the rate changes, your new Annual Percentage Rate will be determined by the indicator used by the selected lender (either Prime or Libor) plus the spread set forth by the lender. There may be minimum Annual Percentage Rates that apply.
- Are there any prepayment penalties? This will depend on which lender is selected for your loan. Some lenders do not have any prepayment penalty, which means that you will be able to pay off the loan at any moment. The lenders that do have prepayment penalties will typically use a 3-2-1 (3% penalty if the loan is paid off in year 1, 2% in year 2, etc.).
- Are co-borrowers allowed? A co-borrower is allowed; he/she must be direct kin (Mother, father, spouse, son, daughter, etc.)
- Are there up front fees? There are no upfront fees to get preapproved. Once you submit the full application package and are approved by the lender, you will be required to submit up front fees to cover the cost of the appraisal and the title search.
- Why is the property put into a guaranty trust? A guaranty trust is less expensive to set up than a conventional mortgage and provides the lender with a quicker foreclosure process in case it is necessary. Once the property is registered under your name or your corporation, it will be put in the guaranty trust, where it will be held for the duration of the loan.
- Is Title Insurance/Title Guaranty required? Lenders will require a Title Insurance (or Title Guaranty, as it is called in Costa Rica) for the amount of the loan (known as a Lender’s Policy), as it provides additional collateral. The lender will be named as beneficiary for the loan amount and you will be named as beneficiary for the remaining amount. It is advisable that you request an additional policy for the property’s full price as well.
- Is Home Owners Insurance (HOI) required? Yes, it is required for housing and construction loans. The lender will request the policy and you will sign the paperwork on closing day. The monthly payment will include the cost of the policy.
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