Paying cash is the easiest way to cut through a lot of the red tape that accompanies buying property in the USA. It will save you a considerable amount of money, allow you the leverage to negotiate a better price and save considerable time in the buying cycle. Cash closes can be as little as 10 days but on average are about 30 days.
Financing your Purchase as a Foreign National or a Domestic Buyer.
Financing a vacation home in the USA as a foreign national requires what is called “Foreign National Financing”. Foreign National Financing is possible if you know who the correct lenders are and put yourself in the hands of an experienced mortgage broker or Vacation Home Specialist that has experience of foreign buyer financing.
Foreign National Financing may have higher down payments (expect around 30%) and can take as long at 60 days to close so be prepared for red tape. Make sure the lender understands what they are lending on!
Domestic buyers may be able to get a better rate and lower down payment but it is of paramount importance that you understand you need to work with a lender who understands vacation home financing.
Many USA lenders do not understand the vacation home market and will walk you through the lending process only to decline your loan at the final underwriting stage because the property criteria does not fit the lenders profile.
What can be additionally frustrating is that you can explain to them in great detail what you intend to buy only to be turned down days before closing.
What this means is not only might you lose the property, you may lose your deposit and many associated fees you will have paid out throughout the process like a survey, appraisal and inspection fees.
Do not let this happen to you, it’s not very pleasant.
This is very easily avoided by using a lender who is familiar with lending on the vacation home product. There are many excellent banks who do – so make sure you use one who does.