Foreign Buyers Complete Guide to U.S. Homeownership

Nov 30, 2021 | Blog

Non-U.S. citizens looking to buy a home or invest in property can run into issues with traditional lenders. Fortunately, these buyers have other options that can provide them with the resources and support they need. Wondering where to begin? Buying a home as a non-citizen might seem overwhelming. From taking the first steps to closing on your property, we will walk you through the full process in this foreign buyers homeownership guide. Discover how to build up your home-buying support system — and how a hard money lender can provide you with the quick, flexible loans you need for all your real estate goals. A consumer purpose 2nd mortgage is used to pay off high interest debt: credit cards, personal loans, medical bills, tax liens, judgements, and foreclosure bailout. Conversely, a business purpose 2nd mortgage can be utilized for purchasing / improving an investment property. It can also be used for business growth purposes: operating capital, purchasing new equipment, purchasing a new office, etc. A hard money second mortgage can be more beneficial than a HELOC (home equity line of credit) for various reasons.

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Who is a foreign buyer?

Before we begin, you might be wondering who exactly falls under the “foreign buyer” umbrella. Foreign buyers can include:

  • Non-U.S. citizens who have relocated to the U.S. and want to purchase a home or property to use as a permanent residence or open a business
  • Non-U.S. citizens still living in their home country who are interested in purchasing a vacation home or investment property in the U.S.
  • Foreign business entities or foreign investment groups looking to land bank in the U.S.

Understanding how and why you want to use the property will drive the loan process.

Who do foreign buyers need on their home-buying team?

There’s a lot to consider when purchasing a home in the U.S. as a foreign buyer. Are there rules or restrictions from your home country for purchasing in another country? What are the rules in the state you are purchasing in?

You also have to consider your status. Purchasing a home in the U.S. doesn’t affect your legal status, or give you any additional rights. You don’t need a green card to purchase a home in the U.S., but you will need an Individual Taxpayer Identification Number (ITIN).

Building a support team will help you answer these questions and navigate the rules. Your team might include:

  • Real estate agent
  • Attorney
  • Mortgage broker
  • Private money lender
  • Accountant

Finding professionals with experience assisting foreign buyers will be even more helpful as you go through the process.

Preparing to purchase a home

Now that you’ve put together your home-buying team, you can begin the search for properties and dig into the mortgage loan process.

Read on to learn the types of properties available to you, what your loan options are, how to apply, and what it takes to close so you can get into your new home.

What types of properties can foreign buyers purchase?

Foreign buyers can purchase the following types of properties:

  • Single-family homes
  • Duplexes, triplexes, and quadplexes
  • Condominiums
  • Townhomes
  • Land
  • Multifamily buildings
  • Commercial property
  • Manufactured homes

Housing cooperatives, or co-ops, usually cannot be purchased by foreign buyers, or are extremely difficult to purchase. Co-ops require that the buyer’s source of income and assets are from the U.S.

What loan options do foreign buyers have?

U.S. citizens most often use Fannie Mae or Freddie Mac loans acquired through traditional lenders. These government-sponsored enterprises (GSE) own or guarantee the majority of U.S. home loans. However, they won’t purchase non-U.S. citizen loans from mortgage lenders unless you have a work visa or green card.

If you don’t have a work visa or green card, traditional lenders would make you get a non-conforming loan that has higher interest rates. And, either way, since income and credit are harder to prove for foreign buyers who don’t have U.S. tax returns, you will face a tougher and longer approval process.

While you will face difficulties with traditional lenders, there’s a simpler, more straightforward option: hard money lending. Hard money lenders are individuals or funding groups, rather than banks.

What do hard money lenders require from foreign buyers?

Hard money lenders will require some documentation to prove you can repay the loan, including bank statements and assets, but other than that, the process will be much simpler than using a traditional lender. Why? With hard money lenders, it’s all about the deal.

Even for U.S. citizens, it can take several weeks to close on a loan when you use traditional lenders. For foreign buyers, it can be even more difficult to prove your income and credit, so the process can be quite time consuming.

A hard money lender simplifies the process. They want to know your situation, your plan, and your exit strategy in the form of an executive summary. The lender will evaluate your situation based on common sense rather than ticking off tons of requirements.

How to find the right hard money lender

Whether you find a private money lender through a broker or through your own research and resources, it’s going to be most helpful to find a lender who has experience with foreign buyers.

You’ll find that the right hard money lender will be interested in building a relationship with you, to strengthen both the current deal and any future deals you may require. Avantgarde Lending, which services California borrowers, is the ethical standard of the hard money loan industry.

What sets Marquee apart is an honest, transparent, respectful approach to every deal and every customer, plus years of industry experience.

Marquee offers:

  • In-house underwriting, processing, and servicing
  • Loan amounts from $50,000 to $20 million
  • Owner-occupied or non-owner-occupied consumer or business purpose loans
  • Single-family, multi-family, commercial, industrial, construction, and land loans
  • Purchase money, rate-and-term refinance, and cash-out refinance options
  • Loan-to-Value up to 70% (no U.S. credit required)

The greatest benefit to hard money lending, however, is the closing speed.

What does it take to close?

Since the requirements from hard money lenders are so simple and rooted in common sense, closing can be accomplished much faster. Traditional lenders can take several weeks or months, depending on the loan type.

Avantgarde Lending offers same-day approvals and closings in seven to 10 days. Work closely with your lender to ensure you understand exactly what your executive summary needs to contain to keep the deal moving smoothly and quickly.

How Marquee supports borrowers with unique situations

Avantgarde Lending specializes in those complicated scenarios that don’t qualify borrowers for bank loans — or that banks refuse to do.

Our team understands that a borrower’s situation sometimes does not allow them to have the types of documentation required for traditional loans, but the deal still makes sense.Reach out to us today to have our team review your hard money loan request. Or, submit your loan scenario now and we will contact you soon.

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