We’re hearing from contacts south of the border that the biggest U.S. lender for foreign nationals is tightening up its loan criteria. Among other things, maximum loan-to-value for most Canadians buying in the U.S. is expected to drop to 65% from 75%.
In addition, it is becoming extremely difficult, if not impossible, for foreign nationals to refinance or get mortgages on investment properties (at anywhere close to decent rates).
All of this has been brought on by declining U.S. property values and foreclosure activity. It’s becoming tougher and tougher to securitize mortgages held by foreign nationals, despite much lower than normal delinquency rates versus U.S. citizens.
How exactly does it work when a Canadian wants to purchase a home in the U.S? Do they typically pay all cash?
Perhaps another guest post is an order? :)
Hi MJ,
You should look at Dr. Marc Faber’s report (May 1st 2008). His report on US real esate is interesting! California has had just over 47,000 forclosures for the first the first quarter of 2008. This is four times the number of forecloseures for the first quarter, for that state, over twenty years! Plus the supply of new houses is the highest since 1981-1982 !
When Nortel came down from $120 (or so) to $100, $80, $60, etc. as the prices went lower a number of people said now is the time to buy, “look at the old price”! Just because something has gone down in price does not mean you should buy. Some times waiting is the best or taking a pass.
regards,
Brian
Hi MDJ,
Basically, a Canadian buying a home in the U.S. needs to put down 35% cash (as of today) There may be exceptions. The rest can usually be financed with a mortgage. There is typically no credit check (believe it or not) but the property must appraise well.
The best bet is always to speak with a U.S. broker for the particulars.
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Hi Brian,
Sage advice!