An Overview of the Loan Process
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1. Get Pre-qualified
When buying real estate in Latin America, you may be pre-qualified to ensure you have good possibilities of actually getting the loan. A pre-qualification can be easily completed through the internet and over the phone. It does not require any paperwork, and you can get a response within 24 hours. It will give you a clear idea of what amount you may be capable of borrowing. Once you are ready to begin the actual process, the next step is to get pre-approved. Pre-approval requires authorization to pull your credit report and the completion of a simple form.
Being pre-approved will:
- Inform you of your maximum affordable home value and save you from previewing properties outside your price range.
- Put you in a stronger negotiating position with the seller, because the seller will know your loan is pre-approved.
- Help you close quickly, since your loan is pre-approved.
A pre-approval can be issued within 24 hours, and you will obtain a letter from the Mortgage Alliance Program (MAP), stating the program conditions that best suits your needs. This letter will be valid for a period of three (3) months. After that, it will be necessary to have you repeat this process.
2. Submit the Complete Loan Package
Your pre-approval letter will be accompanied by a Loan Package for you to complete and send back. This Loan Package will contain the following application documents:
1. Uniform Residential Loan Application (1003)
2. Know Your Customer Form (KYC)
3. Application for Title Insurance
4. Escrow Agreement
5. Company Information Questionnaire (Self-Employed Only)
Additionally, you will be required to submit the following supporting information:
1. Tax returns for the past two years
2. W2 forms for the past two years
3. Bank statements for the past three months
4. Last pay stub
5. Copy of passport and driver's License
6. Purchase agreement
7. Copy of life insurance policy (If required)
8. CPA letter (Self-Employed Only)
9. Commercial references (Self Employed Only)
The Loan Package may be submitted via e-mail, however, participating lenders will require the original application forms on closing day. If you do not plan on being present, please send the originals via courier. DO NOT use whiteout.
Please note that the Documents shown above are for a Full Document Application, the requirements may vary according to the lender that funds the loan.
3. Obtain Loan Approval
Once your loan application has been received, we will start the loan approval process immediately. This involves verifying your:
- Credit history
- Employment history
- Assets including your bank accounts, stocks, mutual fund and retirement accounts
- Property value
- Based on your specific situation, additional documents or verifications may be required.
This part of the process usually involves a lot of interaction with the participating lender. It is here that our mortgage specialist will come into play to serve as liaison with participating lenders to ensure the loan is approved.
4. Send Up Front Fees
Once the lender has issued Loan Approval, you will be required to fund the required upfront fees into your escrow account. These upfront fees will be detailed in the Escrow Agreement and usually include:
1. Appraisal
2. Application Fee
3. Underwriting Fee
4. Escrow Fee
5. S.R.E. Permit (Mexico Only)
6. Certificate of No Liens (Mexico Only)
7. Notary Upfront Fee (Mexico Only)
5. Issue Legal Documents
Once the upfront fees have been received the following steps need to be completed to gather all the documents that will be required to close:
1. Title Research on Property*
2. Issue Title Commitment (If Required)
3. Issue Appraisal
4. Draft Guaranty Trust
5. Obtain S.R.E. Permit (Mexico Only)
6. Obtain Certificate of No Liens
7. Issue Power of Attorney (If Required)
8. Make sure funds needed to close are in place
* It is important to clarify that in order for a lender to issue a loan; it requires collateral, which is the property in country. This property needs to be legally registered and should have its individual property ID (Known as Folio Real in Costa Rica and Mexico, or its equivalent in the specific jurisdiction). If the property does not have its ID, the lender will not have collateral and will not grant the loan. It is highly recommended that you ask the seller if the property is already registered. We verify this early in the process, so that we do not go through the application process to find out that the property is not in good standing.
6. Close the Loan!
Once all the required documents and funds are in place, the assigned Mortgage Specialist will coordinate the closing time and place with all the parties. It is very important to be aware that unless a Power of Attorney (POA) has been issued, you will be required to attend the closing. POAs are more commonly used in Mexico, although they can also be used in Costa Rica and the Dominican Republic.
Closing times will also vary depending on the lender and the country where the property is located. From the moment that you submit the complete loan package to the time the loan is closed and funds are disbursed, the expected time to close is:
- Costa Rica 30 to 45 days
- Dominican Republic 30 to 45 days
- Mexico 60 to 90 days
Stewart Title Latin America - Av. 11 Calles 13 & 15 Teral Building #2 - Third Floor - San Jose, CR 4482 1000
Office Phone: 214 774 2204
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STLA does not have a license granted by the Mexican, Costa Rican or Dominican government and is not subject to supervision by Mexican, Costa Rican or Dominican financial regulators to sell mortgage brokerage services. The Mortgage Alliance Program (MAP) is not affiliated with Stewart Information Service Corporation, Stewart Title Guaranty Company or any of its subsidiaries and affiliates.
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