MORTGAGE INFORMATION


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Mortgages on properties in Florida are easily arranged – usually up to 80% for an overseas buyer. The loan to value (maximum lending amount) is based on the lender’s assessment of the area and property value based on the resale potential and market stability and the status of the client financially. A non-status mortgage is a popular option and is available for 70% loan to value.

We are pleased to have on board as our preferred mortgage lenders: International Mortgage Associates, a licensed Mortgage Broker in Kissimmee.

International Mortgage Associates are ideally placed to guide US and international clients through the mortgage maze, wherever you choose to buy, but particularly in Florida.

Our mission is to build a dedicated compliant mortgage team that can provide innovation international mortgage solutions and unsurpassed client service.

We are equipped to provide high quality mortgage advice for US and International clients. Whilst we cover our prime markets, we also like a challenge, so if you want to buy in another area of the World, let us know and we will use our experience and contact to source a solution for you.

Types of Mortgages

A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac, Fannie Mae and Freddie Mac guarantee, or purchase 35-50% of all mortgages.

A Current Fannie Mae guideline for conventional home mortgage loan is at just over $417,000 for a single-family home in Central Florida and can vary in other areas.

Conventional Loans are available for home purchase, refinance or Cash Out refinance.

Most home owners have heard of FHA (Federal Housing Administration). FHA is a department within Housing and Urban Development (HUD) and is run by Federal Government. FHA is designed to assist first time buyers, but not limited to first time buyers.

The main benefits of FHA loans are:

  • Deposit/Down Payment: FHA minimum down payment is 3.5% of the purchase price.
  • The down payment does not need to be the borrowers own funds. The down payment can come from a gift, grant, employer or even a 401k loan.
  • FHA does not require a minimum credit score, but all loan investors and servicers use a minimum score of 640.
  • Interest rates tend to be more competitive with FHA than Conventional Financing, where rates are sensitive to high loan to Values (LTV) and Credit Score.
  • FHA is generally easier to qualify for , i.e. the criteria is less stringent.

A Jumbo Loan in Central Florida is a loan that is higher than the maximum loan for Conventional Lending. It exceeds the Fannie Mae’s and Freddie Mac’s loan limits and is currently set at $417,000 in Central Florida. A Jumbo Loan is also known as a Non-Confirming Loan.

The Loan to Value (LTV) is based upon the amount you want to borrow.

Up to $1,500,000 to $2,000,000: Maximum 75% LTV.

There are so many different types of mortgages available to you, you may not feel confident which is best suited to your circumstances. We are here to help you decide which mortgage type is best for you and to guide you through the process.

Florida Residential hard money loans are usually offered by private lenders like hedge funds, wealthy private individuals and small community based investment companies.

These loans tend to be asset based and focus on the Loan to Value of the asset pledged by the borrower. Conventional Loans focus on ‘full document’ underwriting, which means that they review the borrower’s credit history, tax returns and income statements when underwriting. Hard Money Loans focus more on the value of the equity in the securitized asset instead. A typical Loan to Value for a Hard Money Loan would be 50% to 55% borrowing.

As the underwriting is less stringent for Hard Money Loans, closing can often occur much more quickly than a Conventional Loa, often within two to three weeks.

The trade-off is that the interest rates for Hard Money Loans tend to be a lot higher, often 6-8% above the rates available in the conventional loan marketplace. This means that the loans tend to be shorter term as borrowers will look to repay as early as possible.

Hard Money Loans are available for US Clients and International Clients alike.

Hard Money Loans are likely to benefit the following types of Borrower:

  • Borrowers who have previously been foreclosed or made Bankrupt, who are looking to rebuild their credit history.
  • Borrowers looking for shorter term financing, e.g. Borrowers who need to close quickly on a foreclosure. A conventional loan may take 40 – 60 days, whereas a Hard Money Loan could take just 14 – 21 days.
  • Borrowers who cannot secure finance residential renovations, maybe prior to selling or renting property.
  • Foreign National Clients looking to buy multiple properties. Most ‘conventional’ Foreign National Lenders will only allow Borrowers to buy one property, so the option to buy several through Hard Money Mortgages can be attractive.
  • Hard Money Lenders will consider ‘investment properties’, including retail, industrial, hotels and office buildings. They may even consider land acquisitions and development projects. Conventional Lenders or Commercial Lenders will all want full document underwriting.
  • Speculators who can negotiate good discounts on purchase price as Hard Money Lenders will take the discount into account, essentially allowing up to 100% financing, e.g. if a property is being purchased at a discount and is sold for $50k. When the appraised value is $100k, a Hard Money Lender will lend the full purchase price, i.e. $50k. A Conventional Lender will never do this.

Foreign National (FN) loans are loans granted to non US citizens, to help them buy residential property in USA. The lenders in this marketplace will usually lend to four groups of people:

  • Financing of a Primary Residence, which is granted to FN’s who have a Visa allowing them to work in the USA, but who are not US Citizens.
  • Financing of a Secondary Residence, which is granted to FN’s who want to purchase a Vacation Home in the sun. ie they will not rent the property out, but keep the property for their own private use.
  • Financing of an Investment Property, which is granted to FN’s who want to purchase a residential property with the specific aim of renting the property out, either short term or long term.
  • Financing of a Commercial Investment Property, which is granted to FN’s who want to buy Commercial Real Estate for investment purposes.

The process of establishing which lender is right for you will take into account:

  • Which of the four loan types described above do you require?
  • Your personal circumstances, eg how much deposit do you have, what is your income and credit history in your home country?
  • What closing times frames you have, ie how quickly do you need to complete?
  • The flexibility/inflexibility of the lenders process some lenders have a very rigid process, eg some lenders insist that you fly over for the closing process, others will allow closing documents to be emailed to you in your home country.

Mortgage Process:

For the purposes of this section, I have assumed that you and your Realtor will have done some due diligence on what areas and property types are likely to be right for you. You have isolated a property you would like to make an offer, however you won’t be able to make an offer because the seller will want to see proof that you can purchase:

The Lending Process Starts Here:

  • You will need to secure a Pre-qualification letter prior to making an offer on any property.
  • Your offer is accepted and you have signed contract always ensure that your contract is written on the basis that it is ‘contingent’ on the loan being approved as this will ensure that you get your escrow deposit back if the loan can’t be granted.
  • Gather all supporting information for the loan.
  • Receive legal ‘disclosures’ including a Good Faith Estimate of estimated closing costs.
  • The lender gives preliminary decision and will either give initial approval and order the Appraisal (property valuation), or they may decline or request additional supporting information.
  • Once the lender has received the additional information requested and the appraisal has been done, the ender will review the entire file and confirm that they will approve your loan or not. They will produce a letter of approval, which will either be conditional on some simple additional information or give a non-conditional approval, which essentially means that your file is complete. A typical condition at this stage is that they need to see adequate buildings insurance cover we will then get quotes and cover arranged.
  • As soon as the lender has all of the supporting information and the appraisal is fine, the loan will go to the lenders ‘closing department’, where the mortgage documents are prepared.
  • Having prepared the mortgage documents, they will send these to the Title Company, who will handle the closing process. They will prepare the Legal Documents and together with the Mortgage documents, the Title company will have the closing package.
  • One of the closing documents the Title Company will prepare will be the HUD 1 document. This document shows all of the financial details of the contract, all credits, all costs and any amount still left to be deposited with the Title Company in order to close. The HUD 1 is the closing Cash Flow document and will be emailed to you a day or two before closing. The HUD 1 will be checked and agreed by you, the lender and the seller.
  • Once approved and closing balance of cash has been deposited with the Title company, the transaction is ready to ‘close’.
  • Closing takes place when all documents are signed by all parties and notarized. The process for this will depend upon the individual lenders. After closing the Title company is responsible for the disbursement of the proceeds, eg funds to the seller, insurance costs to the insurance company, taxes to the tax office etc.

The process outlined above is fairly simplistic as you will discover when you enter the process.

Our aims throughout the process are:

  • To guide you through the process step by step.
  • To explain any documents that you don’t understand in the process.
  • To provide you with updates throughout the process.

Unconventional Loans:

  • Deposit: 35% minimum, based on the purchase price.
  • Closing Costs: circa 4% plus circa 2% for pre-paid property taxes and the first years house insurance.
  • Repayment: Interest Only available with a deposit of 40%.
  • Property Types: Villas and Townhomes, Condo’s but not Condo-hotels. The distinction between condo and condo-hotel is fairly complex, so please contact us and we can help you assess whether the property you are buying is a condo or a condo-hotel.
  • Number of properties: One property.
  • Affordability: US lenders use a Debt/Income calculation to assess affordability. Income must be from verifiable sources and the debt ratios for housing costs alone is 35%, with an overall debt ratio of no more than 45%.
  • Documentation: Must be in English, if not, all documents must be translated by a Certified translator.
  • Reserves: At closing, aside from closing costs, you must show reserves equivalent to 24 months PITI (Loan Principle, Interest, Taxes and Insurance). 12 months of this needs to be in your US bank account and 12 months can be shown in your home country.

Conventional Loans:

  • Deposit: 45% minimum, based on appraised value, rather than purchase price.
  • Closing costs: 6-8%
  • Property types: All types considered, including multiple purchases.
  • Affordability: Not Applicable.
  • Documentation: Must be in English, if not, all documents must be translated by a Certified translator.
  • Reserves: None Required.

The rates are dependent upon the lender, but will range from circa 3.9% for a 5/1 ARM (fixed 5 yrs then reverts to Adjustable Rate Mortgage) to around 5.8% for a 30 yr fix.

Non Conventional Loans (Hard Money):

  • The rates tend to be much higher to reflect the fact that these loans are ‘asset based’ loans rather than fully underwritten loans, like conventional loans. You can expect to pay rates between 8% and 11% for this type of facility.

Closing Timeframes:

Conventional Loans:

  • Conventional Loan lenders are closing in around 45 to 60 days depending upon lender. This needs to be taken into account when negotiating the closing timeframes within your purchase contract.

Non Conventional Loans (Hard Money):

  • It is technically possible for a Hard Money Lender to close a mortgage loan within 24 hours, however a realistic timeframe is between 14 to 21 days.