Hello Everyone!
My name is Ben Carmona. I am a Mortgage Planning Consultant here in the US who specializes in investment loans made on residential 1-4 unit properties. This includes loans made to foreign nationals. We have been successfuly assisting clients in Australia and I thought I'd share some tips for financing here. Residential financing is not available on properties over 4 units. This type of financing is done by commercial lenders. (currently researching for these lenders)
No SS# or US credit needs to be established. However, if a ss# has been issued, the credit will need to be pulled. Most the time lenders will require 3 reference letters from country you live in. These must state your name (business accounts cannot be used), account #, balance, monthly payment, opening date, and if the account ever went over 30 days past due. The lender is looking for accounts that have been opened for at least 24 months. Some lenders may require less. We have been advised that this can be challenging as many banks there may not be willing to produce a letter.
Seasoning of Loans
Cash Out Refinances
Generally borrowers will need to be on title for 12 months in order to pull cash out of the property and use the real appraised value. I do have 1 lender that will allow cash out using the new value after 6 months. I have others that allow for cash out immediately using the purchase price + documented cost of improvements as the value.
This is really interesting too! If an investor paid all cash for a property, that investor can do a refinance within 90 days of closing to get just his cash back and the loan will be treated as a rate/term (below). The value of the appraisal will be used to calculate the ltv (lvr). The investor will have to show that all of the funds for purchasing the property came from his/her own assets (checking, liquidated stock, line of credit...etc).
No Cash Out (Rate/Term)
The new value of the property can be used immediately if no cash is being taken out.
One additional important tip for those investors with current hard money loans. Properties listed for sale by the investor in the last 6 months will typically not be eligible for CASH OUT refinances. The guidelines however do specify that exceptions can be made by the lender on these. Rate and Term (just paying off the existing loan) should be ok but the property has to be taken off the MLS and no longer listed. The lender will require a solid explanation of why it was taken off the market.
Purchases
As a rule of thumb, most lenders will require the seller to be on title for at least 3 months. Some even require 6. It would always be advised to know the past history of the property as the lender will be watching for multiple flips. Investors can’t purchase the property via an assignable contract.
Down Payments and LTVs
Most loans, whether purchases or refinances can be done at 80%. For purchases, this means 20% down must come from the investor. There are some lenders that allow up to 90% but the rates and costs will be higher due to the increased risk to the lender. Other lenders will require 30% down but may be more flexible on the amount of documentation required by the borrower.
US Bank Accounts
Many lenders will require that the investor has a US bank account open. Especially, if funds are needed for closing. It would be advised to consider contacting a US based bank to open an account in case this is ever required. A list of flexible banks has been provided.
Appraisal, Title, and Survey
We allow investors to choose the vendors they or their representatives have developed a relationship with. The vendors are ran through a list to make sure not black listed. Both the appraisal and survey must be paid for upfront by the investor. This is something that the investor or their representative will need to make arrangements for. The costs from the title company can vary from state to state and are based upon the relationship an investor has with that vendor. We asks for your help in getting all figures upfront, including but not limited to settlement fee, attorney fee, doc prep, wire, overnight, title insurance, etc. Knowing these immediately will help in structuring an investor’s loan properly. Keep in mind that most residential lenders do not make loans to or title properties to a LLC (Corp). This type of financing would be done by a commercial lender. Investors here in the US use a quick and easy process called Quit Claiming to easily transfer title back and forth from their personal name to LLC (Corp), or vice versa. This way they can qualfiy for the residential loans whico offer longer terms and lower rates.
Heating sources. We have found that some lenders will not finance a property that has not heating source. Space heaters are not acceptable. Window units that are not permanently framed in and hardwired are not acceptable either.
Closing
As mentioned previously, any funds required to close the loan may require that funds come from a US bank account. Some lenders or programs will not allow for a power of attorney to be used. In these situations, the loan docs will be sent to the investor by the title (escrow) company. Most overnight mail providers will take 3 days for delivery so far faster service the title company can email them directly to the investor. However, the investor will need a printer with the ability to print both letter and legal size documents. Once the documents have been received by the investor, the title company will be responsible for answering any questions about signatures or notaries. The investor will need to have the package singed and notarized at the US Embassy or Consulate's office. Please contact the Embassy or Consulate’s office now to discuss the hours opened, procedures, and any costs for this service. The loan will not fund until the documents have been received back by the title company. This usually takes about 3 days for overnight services to delivery globally. The seller (if purchase) or lender being paid off (if refinance) will not receive the proceeds from this loan until it funds. Funding should happen the day the title company receives documents back.
MISC
One lender available has concerns about an investor concentrating too much in one area using their financing. This would have to be addressed as we move forward with multiple transactions. The lender couldn't answer if there was a specific number to one area or how far apart properties should be.
Minimum Loan amounts are going be $75,000. In some cases, we can make special exceptions down to ~ $50,000.
I'm going to provide 2 other threads as well:
Foreign National Requirements: http://www.somersoft.com/forums/showthread.php?p=274181#post274181
US Banks for Foreign Nationals: http://www.somersoft.com/forums/showthread.php?p=274180#post274180
To Our Success!
My name is Ben Carmona. I am a Mortgage Planning Consultant here in the US who specializes in investment loans made on residential 1-4 unit properties. This includes loans made to foreign nationals. We have been successfuly assisting clients in Australia and I thought I'd share some tips for financing here. Residential financing is not available on properties over 4 units. This type of financing is done by commercial lenders. (currently researching for these lenders)
FOREIGN NATIONAL TIPS
Social Security and CreditNo SS# or US credit needs to be established. However, if a ss# has been issued, the credit will need to be pulled. Most the time lenders will require 3 reference letters from country you live in. These must state your name (business accounts cannot be used), account #, balance, monthly payment, opening date, and if the account ever went over 30 days past due. The lender is looking for accounts that have been opened for at least 24 months. Some lenders may require less. We have been advised that this can be challenging as many banks there may not be willing to produce a letter.
Seasoning of Loans
Cash Out Refinances
Generally borrowers will need to be on title for 12 months in order to pull cash out of the property and use the real appraised value. I do have 1 lender that will allow cash out using the new value after 6 months. I have others that allow for cash out immediately using the purchase price + documented cost of improvements as the value.
This is really interesting too! If an investor paid all cash for a property, that investor can do a refinance within 90 days of closing to get just his cash back and the loan will be treated as a rate/term (below). The value of the appraisal will be used to calculate the ltv (lvr). The investor will have to show that all of the funds for purchasing the property came from his/her own assets (checking, liquidated stock, line of credit...etc).
No Cash Out (Rate/Term)
The new value of the property can be used immediately if no cash is being taken out.
One additional important tip for those investors with current hard money loans. Properties listed for sale by the investor in the last 6 months will typically not be eligible for CASH OUT refinances. The guidelines however do specify that exceptions can be made by the lender on these. Rate and Term (just paying off the existing loan) should be ok but the property has to be taken off the MLS and no longer listed. The lender will require a solid explanation of why it was taken off the market.
Purchases
As a rule of thumb, most lenders will require the seller to be on title for at least 3 months. Some even require 6. It would always be advised to know the past history of the property as the lender will be watching for multiple flips. Investors can’t purchase the property via an assignable contract.
Down Payments and LTVs
Most loans, whether purchases or refinances can be done at 80%. For purchases, this means 20% down must come from the investor. There are some lenders that allow up to 90% but the rates and costs will be higher due to the increased risk to the lender. Other lenders will require 30% down but may be more flexible on the amount of documentation required by the borrower.
US Bank Accounts
Many lenders will require that the investor has a US bank account open. Especially, if funds are needed for closing. It would be advised to consider contacting a US based bank to open an account in case this is ever required. A list of flexible banks has been provided.
Appraisal, Title, and Survey
We allow investors to choose the vendors they or their representatives have developed a relationship with. The vendors are ran through a list to make sure not black listed. Both the appraisal and survey must be paid for upfront by the investor. This is something that the investor or their representative will need to make arrangements for. The costs from the title company can vary from state to state and are based upon the relationship an investor has with that vendor. We asks for your help in getting all figures upfront, including but not limited to settlement fee, attorney fee, doc prep, wire, overnight, title insurance, etc. Knowing these immediately will help in structuring an investor’s loan properly. Keep in mind that most residential lenders do not make loans to or title properties to a LLC (Corp). This type of financing would be done by a commercial lender. Investors here in the US use a quick and easy process called Quit Claiming to easily transfer title back and forth from their personal name to LLC (Corp), or vice versa. This way they can qualfiy for the residential loans whico offer longer terms and lower rates.
Heating sources. We have found that some lenders will not finance a property that has not heating source. Space heaters are not acceptable. Window units that are not permanently framed in and hardwired are not acceptable either.
Closing
As mentioned previously, any funds required to close the loan may require that funds come from a US bank account. Some lenders or programs will not allow for a power of attorney to be used. In these situations, the loan docs will be sent to the investor by the title (escrow) company. Most overnight mail providers will take 3 days for delivery so far faster service the title company can email them directly to the investor. However, the investor will need a printer with the ability to print both letter and legal size documents. Once the documents have been received by the investor, the title company will be responsible for answering any questions about signatures or notaries. The investor will need to have the package singed and notarized at the US Embassy or Consulate's office. Please contact the Embassy or Consulate’s office now to discuss the hours opened, procedures, and any costs for this service. The loan will not fund until the documents have been received back by the title company. This usually takes about 3 days for overnight services to delivery globally. The seller (if purchase) or lender being paid off (if refinance) will not receive the proceeds from this loan until it funds. Funding should happen the day the title company receives documents back.
MISC
One lender available has concerns about an investor concentrating too much in one area using their financing. This would have to be addressed as we move forward with multiple transactions. The lender couldn't answer if there was a specific number to one area or how far apart properties should be.
Minimum Loan amounts are going be $75,000. In some cases, we can make special exceptions down to ~ $50,000.
I'm going to provide 2 other threads as well:
Foreign National Requirements: http://www.somersoft.com/forums/showthread.php?p=274181#post274181
US Banks for Foreign Nationals: http://www.somersoft.com/forums/showthread.php?p=274180#post274180
To Our Success!
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