What exactly can a foreign national finance in Florida?
- Single Family House purchase
- Condominium purchase
- New construction
- Refinancing (redemption of an existing loan)
- House/Condominium: "Cash-out"-Refinancing (mortgaging of an unencumbered property with succeeding cash payout of the finance amount)
- Everything that is inextricably linked to the Florida property: pool, screen, boat dock, seawall, etc. (not: furniture, car, boat, etc.)
What is the maximum amount a foreign national can borrow against a real estate property?
Most banks require 30% down
Important: When financing through a US bank, the bank requires an independent, state certified appraiser to determine the value of the property by comparing homes that have closed in the area. The bank then will lend money on the purchase price or appraised value – which ever is less
What are the loan terms in Florida?
- House / apartment / new building: 30 years
- Exception: 15-year fixed interest rate, term 15 years
- Balloons (long-term amortization, medium-term term), e.g. 5 or 7 years
- On most loans, there are no prepayment penalties, i.e. you can repay the loan partially or in full at any time, whenever your financial planning, liquidity, U.S. dollar rate etc. deems it to be reasonable without any penalties.
How long can a fixed interest rate-period be for foreign national?
- A basic distinction is made between ARMs (Adjustable Rate Mortgage) and Fixed Rates (15 and 30 years).
- There are a variety of common models here: fixed interest rates for 1, 3, 5, 7, 10, 15 or 30 years
- With variable models, the borrower is protected from jumps in interest rates by so-called “caps”.
What type of documents does a foreign national need for financing in Florida?
In general:
- Credit report from home country (if possible)
- Proof of income (written statement from the tax accountant or employer and pay check stubs)
- 3 references from local banks and/or car loan companies, and/or credit card companies
- Proof of sufficient assets for down payment, closing costs, and reserves ( i.e. 2-3 months bank statements- must verify large deposits)
We will be glad to provide you with some sample texts.
How long does the processing of a loan application take for foreign nationals in Florida?
- The timeframe from credit application to closing is approximately 4 - 6 weeks on average (depending on the credit model and on how quickly you can provide your documentation)
- The better you are prepared, the shorter the processing time
Does the borrower have to be present in the USA for the closing ?
- You do not need to be in the US at any time during the loan processing.
- From application to closing (payment), we can handle everything by telephone/fax/courier
Can the borrower wait with signing the sales contract until loan approval?
- All financing in Florida is object-based, which means that you need a signed purchase- or construction contract in order to apply for a loan
- Important: Please make sure that the purchase- or construction contract includes a "Finance Contingency" (This finance contingency clause allows you a resignation right in case the financing is not feasible.) Please discuss this clause with your REALTOR or an attorney prior to signing your purchase contract.
Which special features exist with construction mortgages in Florida?
- There is no commitment interest
- Monitoring and inspection of construction progress by the bank
- The bank checks the creditworthiness of the construction company in order to minimize the possible risk of default
- The loan amount is paid out to the construction company in installments and only after the service has been completed. The payments are preceded by building inspections by the bank
- Equity is used before debt capital, which means that the loan installments only take effect when the construction phase is advanced
