Looking for Real Estate outside of the U.S. but you don't know where to start. It's a process that can be quite different than purchasing real estate inside the US, that's for sure. But don't let the process scare you, there are some pretty amazing deals abroad. The best place to start would be to find the right loan for you.
How do I get a loan overseas?
Well, it is possible to receive financing from the country that you are looking to purchase your home in, but sometimes it is easier to draw cash from your real estate right here in the states.
Determine if the loan that you have on your home in the US is a "conventional" loan. That is to say that it is backed by Fannie Mae or Freddie Mac. These two companies provide a "cash-out" option when refinancing. A cash-out conventional loan would pay off existing loans on the property and then give YOU, the borrower, the extra cash to do with as you please! Keep in mind that there are loan limits, known as loan-to-value (LTV) guidelines that control how much you can borrow.
Are there any pre-qualifications that I should have in advance?
Yes, there are few qualifications that you should be certain that you have before applying for a loan that provides cash-out financing.
1. You must have a good credit score.
2. You should have about 30-40% equity in the home.
3. You will need a good mortgage payment history.
4. You should generate enough income that your new home payment plus all other debts that you have will be at least 43% of your gross payment.
What types of loans provide cash-out refinancing?
FHA loans - FHA (Federal Housing Administration) Loans are most often thought of as first time home buyer loans. These loans provide cash-out financing and the maximum loan amount is typically 85% of the current value. The advantage to this loan is that you can qualify with a lower credit score and it allows for a higher maximum LTV ratio. You also do not need as much equity to get a larger cash return.
VA Cash-out loans - If you are an eligible US military veteran and/or an active duty service member you can be eligible for a VA Cash-out refinance of up to 100% of your home value. As an added bonus, no monthly mortgage insurance is required, only a one time fee paid up front that is equal to a small percent of the loan amount, usually around 2.15% or 3.3%. You will also need sufficient credit and a good income to qualify.
Reverse Mortgages - These types of mortgages are available to homeowners that are 62 and older. This special loan requires no monthly mortgage payments, instead homeowners access the home equity they have acquired and defer payment of the loan until they move or sell. The home owner is still responsible for the property taxes and insurance. There are a few requirements for this type of loan. You will need a large amount of equity, some where in the neighborhood of 50%-70%. You also need to live in the house at least 6 months out of the year.
Home Equity Lines & Loans - These loans are typically second mortgages that are taken out on top of an existing first mortgage. However, unlike most other cash-out refinancing options, the first mortgage does not have to be paid off. This option is cheap and fast, as many mortgage companies and local banks offer great rates and loans up to 100% of the homes current value.
So, if you are looking for a great way to raise some money for a home abroad, you may be sitting on it, or IN it, as it were. Your US real estate can be a great opportunity to get some quick cash and sail away....