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If you are an international citizen looking to buy a home in the US In the short term, start the process early, especially when looking for a home loan. As professional real estate agent Nabaraj KC puts it, “Think 10 times before investing money in the house. Look for the characteristics you’ve always wanted, such as the neighborhood, the surroundings, and the age of the property.”
The good news is, you don’t need to be a green card holder or a US citizen. You can buy a home directly in your own name or through your business entity, such as an LLC. Foreigners don’t even need to travel here to close the deal. By using a power of attorney, you can authorize someone else to sign the closing document on your behalf, and you can guarantee a home loan by paying 30% to 40% of the home purchase price as a down payment. Although you will need to obtain an individual tax identification number (ITIN), either from the Internal Revenue Service (IRS) or from a Certified Professional Accountant (CPA) on the list approved by the IRS.
Here are some of the key steps needed to go from considering buying a home in the United States to closing the deal.
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Do your preliminary research
Think carefully about why you are buying a home in the United States. Will you use it as a vacation home? Are you buying it for your children studying at an American university? Or are you just buying this house for investment purposes? Obviously, depending on your goal, you will be looking for different types of houses and will be willing to spend different amounts. Once you’ve identified your purpose, you can start analyzing real estate listings online and in newspapers and other s. This will give you a clear idea of what is available within your budget. Over a period of time, by observing price changes, you will also be able to identify market trends.
Apply for a mortgage
If you don’t have enough money to buy a home in the US upfront, the good news is that you don’t need to worry; Initially, you can pay a small amount ranging from 5-20% of the purchase price as a down payment. And for the remaining amount you can apply for a bank loan known as a mortgage. However, for the mortgage to be approved quickly, you will need a strong credit rating and history.
To get an idea of how much a bank will be willing to lend you, get prequalified with a lending bank. After examining your financial records, the lender will inform you of the maximum amount you can receive. You should consider obtaining prequalification evaluations from various banks and mortgage companies. Major US Mortgage Lenders Include Fannie Mae / Freddie Mac, Wells Fargo Mortgage, Bank of America, Chase Bank, Ally Bank, CitiMortgage, and the US You may find that a certain bank or business is willing to lend a large amount in easy installments.
In addition to these mortgages, you should also discover options for government-backed loans. Federal Housing Administration (FHA) loans are government-insured mortgages. If you can’t afford large down payments, FHA loans are perfect for you, as you need to pay as little as 3% of the purchase price as a down payment. Like FHA loans, the United States Department of Agriculture offers loans that moderate-income people can use to buy a home in rural areas, and you can pay the mortgage back to the bank in monthly installments.
The general rule of thumb is that the more installments you pay, the less you will have to pay for each one. However, if you feel that you will not be able to pay the installments even during the longest period of the mortgage, you should consider buying a large house and renting the extra rooms.
You can also seek freelance work and other career opportunities to earn additional income. Although the initial earnings through alternative s may be minimal, your income is likely to increase as you gain more skills through persistent efforts. Stay motivated by recognizing that any additional income from these activities will not only help you pay off your mortgage, it will also make it more complete. Once you’ve found the best mortgage lender, you can get a prequalification letter by paying a small fee that ranges from $ 40 to $ 50.
Find the right real estate agent
Unlike practices in many other countries, the seller pays the commission to real estate agents in the US Therefore, buyers can use the agents’ services at no cost. These agents have up-to-date and specialized knowledge of local properties and can be very helpful in finding the right property according to your requirements and budget. However, you should also be aware that real estate agents get higher commissions if you pay more for a home.
You can find a good agent through referrals from your friends and family or by visiting sites like Realtor.com. You can also start working with multiple agents to compare their service levels. When you have finalized who your agent will be, you will begin to determine which houses match your criteria.
Visit houses and ready offers.
You can now start visiting multiple homes identified by your agent. Take notes and photos of each home so you can share them with friends and family for input.
You should also check the operation of various accessories in each house. For example, turn on the shower to check the water pressure and how long it takes to heat up. Also, ask the landlord to disclose any defects in the home of which the landlord has prior knowledge. Check the windows. Take notes on the size of the street to see if enough space is available for visitors to park their cars, etc. How far away are schools, shopping centers, and hospitals? Take all the time you need to find the home that meets all of your requirements.
Next, check with your agent on how much to offer to the seller. It is very rare to find it at the list price. Negotiate for the most valuable deal. If the agent has sold houses of comparable size in the current location, they can negotiate based on that data. It is important to note here that the bank or mortgage lender will not be willing to lend you any amount that is above the market rate or the actual value of the home, and you may have to pay the additional amount as initial or closing fees. . Therefore, it is of the utmost importance that you do not accept any unfair value.
After a successful negotiation, you need to make an offer by signing a contract. After signing, both you and the seller are legally bound to complete the deal. However, certain contracts allow either party to walk away from the deal.
Get a professional inspection
Although you may have already thoroughly inspected the home on your own, you should arrange a professional home inspection to assess any structural damage. Inspection reports also identify things that need to be repaired to restore them to their original condition or operational form. Inspection reports are given to both the seller and the potential buyer and can cost between $ 400 and $ 500. That cost is the responsibility of the buyer.
If the report reveals significant structural damage, you can cancel your offer without any penalty. Conversely, if the home only requires minor repairs, you can ask the owner to do the repairs themselves, or you can adjust the cost through negotiation. If the landlord agrees to make the repairs, be sure to finally inspect that all repairs have been made in accordance with the agreement. Your real estate agent will help you organize the inspection visit under specific conditions. Be careful with such wording in the contract; If not, you may be surprised to find that a seller is no longer willing to abide by your terms.
Get a property appraisal from the bank or mortgage lender
After signing, you can approach the bank or mortgage lender to assess the property’s value without your involvement. However, the lender will charge you for the cost of this appraisal, which is likely to be $ 500 to $ 600. Lenders will generally add this cost to their closing costs or initial costs.
You can also explore various mortgage options. Generally, there are two types: fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages generally have between 10 and 30 years to repay the loan. The interest rate for this type of mortgage is high, but it remains fixed during the tenure. Fixed rate mortgages are perfect if you are risk-averse and prefer security, stability, and fixed payments for repayment.
Adjustable rate mortgages charge a variable interest rate that adjusts within predefined upper and lower limits. The interest rate on these mortgages is generally lower. However, make sure that if the interest rate rises to the highest maximum value, you will be able to make the required payments.
If you’re buying a new home without selling an old one, you should also explore your options in bridge financing, in which lenders pay off the loan to meet mortgages for both new and old homes, and you can repay the loan by selling your old home. Based on these characteristics, your personal preferences and your particular situation, you can choose a mortgage that is right for you.
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Secure property insurance and close the deal
Select an insurance agent and keep in mind that lenders pay insurance costs and premiums, and lenders add these fees to closing costs. However, if you prefer, you can pay the insurance costs yourself.
As the last step in closing, you will need to obtain the services of a title company that ensures that the seller is the rightful owner of the real estate, that the property is free from dispute claims, and that there are no pending lawsuits related to the property. . You will then ask the mortgage lender to wire the money to the title company. After conducting the necessary verifications, the title company will process the sale.
If this all sounds complicated, it doesn’t have to be, and you can move quickly and smoothly if you’re prepared. Happy house hunting!