Mortgage Loans

When buying real estate in the United States, you need to consider a number of factors that directly affect the purchase. In the United States, there are no restrictions on the purchase of both residential and commercial real estate. Only the purchase of commercial real estate (or other available option) under the EB-5 program by foreigners allows you to legally reside in the country with the subsequent issuance of a Green Card. Owning a property does not provide an advantage in obtaining an entry visa.

Cash real estate purchase

You can buy real estate in the United States for cash, since there are no restrictions on the amount in the country. Transferring money to your attorney or escrow account is risk-free. When leaving the country at customs, it is necessary to declare cash equivalent of $10,000 per person, intended for the purchase of real estate.

Opening an account to buy real estate will only be required if you plan to use a mortgage loan.

Forms of real estate ownership

Real estate buyers can be both individuals and legal entities (trusts, limited liability companies, LP partnerships, etc).

The main types of residential real estate in the United States:

  • Detached Single-family – detached house for one family, often with a swimming pool, backyard;
  • Townhouse – two-three-storey house for 2-3 families, with a separate entrance and adjoining land plot;
  • Condominium (Condos) – an apartment in a residential complex with its own infrastructure, with a swimming pool, gym, recreation area, etc., which are in the common use of all residents;
  • Cooperatives (Co-ops) – cooperatives are similar to condominiums, however, cooperatives are the property of a corporation created specifically for the cooperative and the property is acquired by purchasing shares in the corporation. The owner of the share receives a property lease agreement;
  • Residential Land – land for residential development.

Mortgage loan

Getting a mortgage loan from an American bank is not an easy task. To get a mortgage, you must have a good credit history. In the event that you belong to the first two categories of residents from the list below, then getting a mortgage loan from a US bank will be much easier.

Types of borrowers

  1. Persons with a permanent residence permit (Green Card) in the United States;
  2. Non-permanent residents with a valid work visa;
  3. “Foreign nationals” whose primary residence is not in the United States.

If obtaining a mortgage loan from one of the US credit institutions is still relevant, then keep in mind that the amount of the initial payment must be at least 30% of the value of the purchased property.

If you are a client of an international bank, then it will be much easier to get a mortgage loan in GA.

Rules for purchasing real estate in the United States

Property purchase rules vary from state to state and between counties and cities.

Most real estate transactions involve several parties:

  • Real estate agent
  • Escrow services can be provided by various organizations: a lawyer, a bank / lender, an independent escrow company, a title company. Escrow is a deposit in the name of the seller from a third party of funds for the purchase of real estate, so that they are issued to him only after all the necessary procedures have been completed.
  • Title company – ensures the receipt of a clean title by the buyer (no pledges and other encumbrances).
    When a property seller and a buyer enter into a purchase agreement, the title company usually plays a great role in closing the deal. Title companies help sellers translate titles and buyers help them get titles. Title companies also study the history of title ownership in order to exclude claims for the acquired real estate, prepare documents for title insurance, and maintain escrow accounts of the parties to the transaction.
  • Real Estate Attorney – In most states, real estate attorneys are optional when buying a home.
    If you decide to seek the help of a real estate attorney, they can help protect your interests and ensure that the real estate transaction complies with applicable state / city regulations. A real estate lawyer carefully examines all the terms of the agreement and the history of title ownership, and also checks the absence of encumbrances with the rights of third parties interested in real estate and the validity of the existing title, prepares documents for closing the transaction, etc. The participation of a lawyer in transactions is especially important when the second party is a corporation or partnership.
  • Appraiser – participates in a mortgage loan transaction. Optionally, you can conduct an appraisal of the acquired property in order to be sure that the real estate price is real.
  • Bank / lender.
  • Inspector – checks the condition of the property for serviceability and the absence of hidden defects before closing the transaction.
  • Insurance Agent.

To buy real estate in the United States, it is advisable to obtain an Individual Taxpayer Identification Number (ITIN) – a taxpayer identification number. ITINs are obtained by foreigners who have tax or other obligations to the federal government.

The procedure for buying a residential property

As soon as a house or apartment is found that suits your wishes, the real estate agent prepares a price proposal. The offer reflects the proposed price for real estate, the commission of the real estate agent (paid by the seller), what exactly is included in the price:

  • interior items, necessary repairs, payment of taxes, utilities, etc. The seller will either agree with the offer, or reject it;
  • counteroffer. The counter offer will address all the issues from your original offer, including the price and any wishes of the seller. The offer is valid for 30-60 days.

It is important to adhere to the dates and terms set out in the agreement, otherwise the seller may take the opportunity to withdraw from the sale, especially if a more interesting offer comes up. To confirm you are serious, about 2% of the sale price is deposited on the escrow account (deposit).

After all the details have been agreed and the seller has accepted your offer, the buyer and / or the specialists hired by him proceed to the due diligence stage.

Physical Inspection is carried out as a standard. Some states, such as New York, require the seller to provide the buyer with disclosure of the terms of the property being purchased.

Depending on the jurisdiction and established practice, a Title search is carried out by the escrow company, title company, attorney or other authorized organizations / persons.

There is also Title Insurance, which protects the buyer of real estate in the event of a situation where the ownership of real estate may be questioned (various encumbrances, persons or organizations interested in real estate, etc.).

If you use a loan from an American bank or other lending institution to purchase real estate, then you need to assess the house or apartment.

At the closing of the transaction, which usually takes place in the office of the escrow company, the buyer and the seller actually sign all the necessary documents, transfer money to the account of the acquired real estate and pay for the services of other persons who took part in the transaction.

The buyer preliminarily conducts a final inspection of the property, it is possible to re-check the title to check whether new encumbrances have appeared by the time of sale.

After signing all the documents, the escrow account is closed, the buyer receives the title, all the necessary documents and keys.