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Helpful Hints
Financing a property in another country can be a very positive experience if you work with the qualified experts. The following information will help you to make informed decisions that will allow you to successfully close your loan.
- The main steps to finance your real estate purchase in Latin America will be virtually the same as those in the United States. However, each country has their own regulations; expect some things to be different.
- If your purchase will depend on whether or not you are able to obtain the loan, we recommend that you sign an option to purchase once you have received confirmation that you the loan has been approved. Otherwise, you may lose the down payment.
- Make sure the property you are financing is in good legal standing and can be taken as collateral for a mortgage loan. It is common practice for condominiums to be sold at preconstruction stages; at this time they may not have been submitted for registration at the public registry; thus, legally speaking, they do not exist. Your Realtor/Broker should be able to provide you with the property status.
- Make sure you work with a loan officer that has experience in processing cross border loans. This will allow you to have a clear understanding of the steps that need to be completed and how long the process is expected to take.
- It is highly recommended that you go through a reputable realtor/broker when looking for a property. A qualified real estate professional is in the best position to determine what you want and help you find it. For a complete list of the realtors/brokers that are members of our Mortgage Alliance Program (MAP), visit our MAP Members Section.
- Hiring an attorney at a local level will also be crucial to have a smooth transaction. Stewart Title Latin America has a program called the Stewart Title Attorney Referral (STAR). This program has formed an alliance with the most reputable law firms throughout Latin America. For a complete list of the STAR Program Members, visit the STAR Member Section.
- Obtain Title Insurance for your property. Although most lenders will require a Title Insurance policy to be issued, this will be to cover the loan amount only, with the lender as the beneficiary. You can always choose to acquire a Title Insurance Policy for the full sales price, in which you will be the beneficiary.
- Use an Escrow Agent - By using an escrow agent, you will ensure that the seller will receive the funds only when he is in compliance with the conditions stated in the Escrow Agreeement. The agreement can state that if the seller fails to comply with his end of the bargain, the Escrow Agent can return the funds to you.
- Make sure you set funds aside for the down payment. Lenders will go as high as 75% Loan to Value, so that means you will need to come up with the remaining 25%. Also, consider an additional 4% to 8% for closing costs.
- Request a Good Faith Estimate prior to closing your loan. A cross border loan may have additional closing costs than a typical US loan. It is important that you be fully aware of all the costs involved.
- Purchase your airplane ticket to attend closing only when you are entirely sure that everything is in place. Your mortgage specialist should be able to confirm that all the closing requirements have been met. This way you will avoid unnecessary expenses. Make sure you bring your passport to the closing. If a Power of Attorney will be issued to grant a third person the authority to represent you at the closing, you will not need to worry about this.
- The property will be secured by the lender through a Guaranty Trust. This is very common in Latin America. The trustee will be set forth by the lender, and a trust set up fee will be included in the closings costs. Additionally, the trustee will charge an annual administration fee. Depending on the country and the selected trustee, this can range in the $200-$500 range.
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