The USA is one of the leading countries with good term for taking out mortgage loans. Such privileges are valid for either Americans or foreigners. Mortgages in the United States are in demand due to a number of properties: a developed economy of the country, a reduced interest rate and loyalty to customers.
Benefits of a mortgage
Getting a mrtgage loan in the United States is suitable for Americans and foreign nationals. The advantages of such a loan include:
Most of the credit companies are loyal to their customers. In the United States, a project was developed to stimulate the construction of new housing and the growth of mortgage use. Thanks to it, financial organizations approve most of the applications for mortgage loans submitted for a house or apartment. The property may be ready or under construction.
Floating interest rate. Many American banks offer floating rate mortgages, i.e. their level is influenced by client diligence. For borrowers, this type of rate may be unprofitable, since it is constantly changing. But with regular payment of the loan without delays, this condition does not matter.
The official paycheck, the client’s own savings (savings, shares, valuable documents) are taken into account.
There is a lot of competition in the US banking market, therefore, in order to attract customers, credit organizations are trying to offer more suitable terms and a low mortgage rate.
Loan program options
Mortgages in the United States for foreigners and indigenous people are designed to improve housing conditions. There are many programs targeting different categories of citizens and with individual conditions.
You can become the owner of mortgage real estate through the following programs:
- construction companies and people with low income. Territorial distribution – Florida. This program is intended for people whose income is at a low level. Its main idea is to purchase residential real estate from the provided list on individual terms.
- for retirees. This is a non-performing mortgage loan, which gives people of retirement age the chance to get a loan for life. The borrower’s property is used as collateral for the loan. The ownership of the property remains with the client.
- a loan given to customers who use energy-efficient equipment in their homes. The main differences of this loan are unique conditions and minimum interest rate.
- lending to people who have become victims of various disasters. Designed for borrowers whose housing has been damaged due to disasters.
How much interest is a mortgage in the USA?
Mortgage loans for American borrowers are issued at 3.5-7% per year. But for clients who come from other countries, the rate is significantly higher. This approach is used to reduce risks if the borrower decides to return to their home country and do not pay off the debt.
The average rate for non-residents in 2018 was 8-9%. The exact amount of interest is calculated taking into account the client’s solvency and documents confirming reliability.
Bank of America is a major banking institution in the United States. It offers the mortgage rate:
- 3.75-4.4% for Americans;
- 5.75-6.4% – for foreigners.
The amount of interest is determined by the period for which the loan is issued and the type of rate. All applications are processed individually, so personal terms and interest rates are available to each borrower.
Basic provisions of a mortgage loan
Most foreign citizens are issued a mortgage loan in the amount of $100,000-$150,000. The size of the mortgage is influenced by the level of the client’s income.
The most significant terms for issuing a mortgage:
- The average down payment is 40%. It can also be reduced to 30% or vice versa increased to 50%. The change in the contribution is influenced by the borrower’s reputation, credit history and income level.
- Loan term – 15-30 years. Selected at the request of the borrower. Most of the clients prefer the longest term, as the monthly installments are reduced. The minimum loan term is also disadvantageous for the bank, because it reduces the profit of the credit company.
- Insurance registration. When buying an apartment or house in America, insurance of the object against natural disasters, catastrophes and other unforeseen circumstances is required.
- No commissions and penalties for early loan repayment.
For foreign citizens wishing to apply for a mortgage in an American bank, a number of requirements are imposed:
- Age category – 25-75 years old;
- You have a valid residence permit, work visa or Green Card;
- Having a social security card;
- Good credit history without delays or non-payments;
- A valid US bank account holding an amount equal to 12 monthly installments on the loan.
- Clients must pay a 3% commission for the provision of borrowed funds. There must be a certain amount in the bank account.