At some point in our lives, we fantasize about owning a vacation home in some beautiful part of the world. Or great escape may be in a home, cabana, cabin or a chalet near a lake or by the ocean. Buried in a lush forest or among a mountain range, or whatever scenery seems more appealing to live, vacation, or even retire to. Turning a fantasy like this into a reality is possible, but buying a home outside the United States is a complicated process. Buying a home in a foreign country often requires complicated contracts that must be translated, larger down payments and higher interest rates.
The United States mortgage lending institutions will not loan money to individuals for the purposes of buying a home on foreign soil. Individuals must obtain a loan through a mortgage lending institution in the country they wish to buy in.
American home owners have the advantage of the U.S. tax write off. This is when the Internal Revenue Service will make deductions on the mortgage interest of the primary home and the second home for up to one million dollars, no matter where in the world the second home is located. As long as all requirements are met for the primary and second residences, this is true.
Gathering all the necessary paperwork and organizing it in a way that the Internal Revenue Service will find acceptable may take some time to do. Especially if the paperwork must be translated into English. Mortgage interest paid on the property, along with all money involved, will have to be converted to American funds. This entire process will come along more smoothly if the individual employs a tax preparer to help convert these transactions.
The value of the American dollar can be a bonus when buying a home on foreign soil. The buyer should expect some headaches with the amount of paperwork involved though. Some countries have laws that regulate what types of properties and locations can be bought by non-citizens. For example: In Mexico, non-citizens are not allowed to buy beach front properties.
Usually, buyers can overcome many problems once they have found the property of their dreams with plenty of patience and persistence and the right mortgage lending institution. Buyers must make sure to find a real estate agent and mortgage lender that are familiar with the rules about non-citizens buying property in their country.
Buying properties in Canada and Mexico is a fairly easy process compared to buying properties in other foreign countries. Buying properties in other parts of the world may prove more challenging and would be best if the buyer checked in with the United States Embassy in the country where they would like to buy properties.
Mortgage requirements are pretty much the same in foreign countries as it is in the United States. First the buyer will need an appraisal on the property to prove that it is worth the asking price. Then the buyer will have to prove their credit worthiness to the lending institution by providing income tax statements, references and proof of employment. The buyer may have to make an extra effort to prove that they will be able to make the required monthly payments.
There may also be extra costs involved in obtaining a credit report that must be sent internationally and if the credit report must be translated. Interest rates on foreign property can vary throughout the world. So regardless of the value of the American dollar, don’t expect to save a lot on interest rates.