USis a country with favorable mortgage lending, both for Americans themselves and for foreign citizens. Low interest rates, loyalty to potential customers and the development of the country’s economy are the factors that determine the high demand for mortgages. Let us consider in more detail what features a mortgage has in the United States and under what conditions Russians can issue it.
Features of mortgage lending in the US
Mortgage lending in the United States has its own nuances and limitations in comparison with the Russian. The key features of the mortgage here include:
- Loyalty of the absolute majority of banks to borrowers (especially to US citizens).
In America, there is a program to stimulate the construction of residential real estate and increase mortgage lending. Therefore, credit institutions often go to meet customers when considering applications and issue loans for both the purchase of finished and the purchase of housing under construction.
- Providing a mortgage loan with a floating interest rate.
Mortgage programs offered by US banks are mostly issued at floating interest rates, the value of which varies depending on the quality of borrowers’ performance of their obligations. This allows banks to increase their income, and for customers has certain disadvantages, among which are constantly changing monthly payments.
- Accounting not only the official income of a potential borrower, but also personal savings.
When reviewing a loan application, all banks in the USA take into account not only its official salary, but also additional income, as well as pension and bank savings, investments in securities, etc.
Important! The US banking sector is highly competitive, which helps customers to offer minimum interest rates and the prevalence of mortgages.
What are the mortgage programs and banks?
To solve the housing problem and improve the current living conditions, potential borrowers are offered a whole range of mortgage programs, each of which is aimed at a certain category of clients and has unique conditions.
Currently, in America you can get a mortgage through the following programs:
- mortgage to support the low-income population and construction companies (The Homeownership Pool) – operates in the state of Florida and allows people with low incomes to receive a preferential loan to buy housing from the established list;
- Home Equity Conversion (Home Equity Conversion) is a reverse, non-performing mortgage, through which pensioners can get a lifetime loan secured by existing property while retaining ownership rights;
- mortgage for disaster victims (Mortgage Insurance for disaster victims section) – a program that can be used by any person whose house was destroyed as a result of a natural disaster or other disaster;
- the mortgage program for customers using energy-saving devices (Rehabilitation Mortgage Insurance) in their homes – such a loan is issued on favorable terms and at low interest rates;
- refinancing program.
Among the banks issuing mortgage loans are Bank of America, JPMorgan Chase, Wells Fargo, First Republic Bank, City Bank of New York, Mellon and others.
For Russians and other foreigners For
foreigners, including Russians, to get a mortgage in the United States is not easy. It is connected with the policy of support by the American authorities and commercial structures, first of all, of its population and the general distrust towards non-residents.
However, the final ban on the issuance of mortgage loans for foreigners is not here. This can be done, but with certain difficulties and restrictions on the part of banks.
A citizen of the Russian Federation will be able to count on obtaining a mortgage in the United States if there are the following factors that increase the likelihood of approval of the application: the
- presence of a letter of trust from a large European bank that can confirm the reputation and reliability of the client;
- a one-time payment of at least 30-40% of the market value of the purchased house / apartment;
- interest increases (the rate in the United States for foreigners will be significantly higher than for its citizens).
Some banks offer special mortgage products for foreigners that provide loans for a period of 30 years with a fixed interest rate for the initial lending period (usually 5 years).
Interest rate in the US.
Local people lending institutions offer a mortgage at 3.5 – 7% per year. For foreigners, the rates will be higher in order to minimize the possible risks of debt repayment and the return of the borrower to their homeland.
On average, a Russian will be able to expect to receive a mortgage loan with an interest rate of at least 5% per annum. Some banks lend to Russian citizens and other foreigners at 8-9% per year.
The final interest rate will be announced to a specific client after studying the documents submitted and its solvency.
The country’s largest bank, Bank of America, provides loans to US citizens at 3.75 – 4.4% per year (the rate will depend on the type of interest (floating or fixed) and the loan period. For foreigners, this range will increase by about 2 percentage points and amount to about 5.75 – 6.4%.
Attention: US banks consider each mortgage application individually, offering each client unique conditions and rates.
Conditions for obtaining a mortgage
The average value of mortgage loans for foreign citizens today is about 100-150 thousand dollars. draws up a zai . in proportion to their incomes
will necessarily require pay the first installment, the amount of which on average is 40% of the cost of housing Some banks ask for 30%, other -. not less than 50% of all depends on the borrower’s creditworthiness and financial reputationperiod..
Regarding the loan , here the client can choose a suitable repayment period – from 15 to 30. Most borrowers try to arrange a loan for a maximum period in order to reduce the value of the monthly payment. Short periods are practically not common, as they reduce the income of banks.
A prerequisite for issuing a mortgage loan in America is to purchase insurance against unforeseen situations and natural disasters, including fires, floods, explosions, etc.
Early repayment is allowed without any penalties.
A foreigner applying for a mortgage must meet the following requirements:
- age limit – from 25 to 75 years;
- availability of social securities;
- a work visa / green card or residence permit;
- no negative credit history;
- the presence of a valid bank account in the United States with the placement on it of an amount equal to at least 12 monthly payments on the mortgage loan.
In addition to the above conditions for issuing a mortgage, it is important to mention the need to pay a commission to the bank in the amount of 3% of the loan amount for providing services. A specific amount together with a 12-fold monthly payment and an initial payment must be transferred to your bank account.
Required package of documents
For registration of a mortgage in the United States will need the following paper:
- Valid passport (+ copy).
- Completed application form.
- A document confirming the right to stay in the United States (green card or work visa).
- Social Security number.
- Help with the work of income over the past 3 years.
- Bank statement with a reflection of the movement of funds on the account.
- A letter of recommendation from any large bank (if you can get).
- A copy of the contract of sale with the seller of real estate.
- Letter from NBKI about the quality of credit history.
All documents must be translated into English and notarized.
If a potential borrower provides a letter of recommendation from a large bank, the bank in the United States will soften the requirements for it and significantly reduce the time for consideration of the application.
Step-by-step mortgage processing
The process of obtaining a mortgage by Russian citizens in America includes the following steps:
- Finding the right property (using private announcements or intermediaries).
- Preparation of a set of documents.
- Opening an account and its replenishment.
- Analysis of banking programs and offers (with the help of a banking consultant and a mortgage calculator, it is important to make preliminary calculations and choose the most profitable option).
- Conclusion of the preliminary contract of sale (it is necessary to specify in it the deadline for receipt of the final amount by the seller).
- Submission of documents and loan application to the selected bank.
- Conclusion of a mortgage agreement and legal registration of the transaction.
Additional costs will be required to lay the cost of insurance (1-3% of the loan amount), a bank fee (about 3%), a fee for real estate valuation and monitoring of the property (about $ 150 per year).
On average, US banks consider applications for mortgage loans for about one month.
Mortgage in America is available not only to its citizens, but also to Russians who have a green card or work visa. A non-resident will be able to get a mortgage for the purchase of finished or under construction housing at 5-9% per annum for a period of 15-30 years with the condition of paying an initial installment of at least 30%. The final loan conditions depend on the client’s creditworthiness, his reputation and requests for the loan itself.
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