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 Can You Hear Me Now?
  
Location: When you hit the middle of nowhere .. Keep driving | If I was looking at purchasing a property in the states would the banks looks at the property I own here (In Ontario Canada) or in Germany as collateral? Or do I have to come in with a whole new application and show nothing? I know here when I looked into everything they only honoured the house and 5 acres.... not the other 398...
Edited by ndiehl 2017-11-17 7:33 AM
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 Elite Veteran
Posts: 889
| Is there a reason why you don't want to use the new property as collateral for the new loan? |
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 Extreme Veteran
Posts: 433
Location: The Lone Star State | Banks will not give you a loan using another property as collateral. You could do an equity loan on those if you have enough equity and use that as down payment for the new loan here if the laws in other countries allow that. When you buy a property that is the collateral for the new loan. |
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Can You Hear Me Now?
Location: When you hit the middle of nowhere .. Keep driving | I guess thats what I mean. Will they look at my history in a different country and what I own when making the decision or base it just on the history there? I am wanting a piece of property to use in the winter months (I won't be working down there just here in the summer) so my job history won't be from there. Not the collateral portion, when I went in here they looked at my assets and such and gave me a net worth, compared it to my income and told me what they would give me if I wanted it. I guess I was just wondering because all my assets and history would be foreign.
It's not an expensive property and I can afford it, if I can't finance I might sell some in Germany and pay it off but I rent it out over there and make an income. |
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Elite Veteran
Posts: 889
| Banks WILL give you a loan using another property as collateral if that property is unencumbered and has an acceptable LTV. Maybe not ALL banks, but not every bank is the same. I have done just that. The bank should look at your assets and liabilities as a whole, no matter where your assets are located. My suggestion would be to use the bank where you have the best relationship. |
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| The simple thing to do is to get you an equity loan on your property in Canada or Germany
and pay cash for the property in the USA. Don't tell them what you intend to do with
the money .. bankers are paranoid with the thought of ending up with a repo on their
books.
Just sayin as an example (amounts are used for easy math):
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If USA property is $100,000 USD ... for a 100 acres @ $1000/acre ...
and you show up with the $50,000 from an equity loan on your other property...
and you have $10,000 pocket money in your bank .. Again do not mention you
made a loan on your other property.
Bankers love buyers with 20% down .... and are easy to finance.
Pay cash for $50,000 for half the property and own the 50 acres debt free.
Make a loan on the remaining 50 acres with $10,000 down and owe $40,000
on the financed 50 acres.
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DO NOT USE AN ATTORNEY FOR YOUR CONTRACTS ...
they work by the hour and will find a word in a standard state approved real estate
contract that has been there for a 100 years to object to in order to make more money...
USE THE REALTOR THAT HAS THE PROPERTY LISTED FOR SALE ..
AND WANTS TO SELL IT FOR A QUICK COMMISSION ..
and they will use the lenders closing department or it is common to use
a Title companies closing department ... since they do a title search to make sure
there are no unknown liens on the property and are the most experienced closers ..
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YOU WILL MAKE TWO CONTRACTS ON THE PROPERTY THRU THE RE BROKER
1) CASH CONTRACT with only $5,000 earnest money down on the contract with
a pending addendum stating the cash sale is dependent on your getting financing
on the remaining 50 acres. Also stating the earnest money is refunded if financing
is not obtained. Broker will hold this money in his earnest money account until
closing.
2) FINANCED 50 ACRES WITH 20% DOWN ... ($10k)
Standard contract with your salary information and credit history taken for approval
of the loan by the lender for $40k ....
If you work the deal in this fashion a physical survey of the property will have to be
made in order to separate the property with two legal descriptions. cost ~$3,000
which can be noted in the cash contract as a shared expense with seller ..
Surveyor's money can be part of the closing of the cash contract.
As a real estate buyer ask your broker who he recommends to lend you the money
to buy and start your approval application as soon as possible. As a previous RE Broker
this is the first thing I would have clients do to get a pre-approval of xxxx amount
of dollars they could be approved for.
In your case, you have the property you want to buy already identified so start your
loan approval as early as possible while your cash contract and financed contract
are getting approved by the seller. Broker should not mention the cash contract on
the financed contract. It has nothing to do with influencing the lender to approve
your loan and could open up a can of worms by someone's curiosity in the lenders
approval committee ... lol
These two examples are simple and standard ways to buy real estate without
allowing the lender to force you into over collateralizing your assets on a low
amount they are lending. Go with the normal 20% down which is normal and
you do not pay any PMI during the loan period.
Also ask for a 30 year fixed mortgage even with a small increase in interest rate vs
a 15 year mortgage .... there is a lot of hype to do 15 year mortgages right now
which means the bankers know interest rates are going to increase and they
want everyone on a 15year mortgage so it will end sooner etc etc ..
Here is where a 30 year mortgage is in the buyers favor .. check the fine print
and you will see you can pay an additional 20% per year on your balance at
any time during your loan or even an extra amount each year which will
reduce the length of your loan. At the same time your payment is lower and
if you get in a financial bind due to no job or medical reasons it will be easier
to pay and doing the cash contract allows you to own that 50 acres unattached
from a lender foreclosure.
You can find loan charts with monthly payouts for any amount of dollars, interest rate
and number of years/months for a RE loan ... it will show you how paying more
on the balance decreases the amount of time owed on the 30 yr mortgage while
payments remain the same.
If there is anyway you can do a RE mortgage from
a Credit Union do so ... their way of figuring interest paid is so much better than
banks and lenders using the RULE OF 72 .. get familiar with both ..
Look at this like a car loan ... when you are financing a car .. they do not ask you
to include the other car you own into their financing scheme ...
Typical loan approval sums ... 28% of your salary allowed for house/land payment ..
8% added includes all of your indebtedness including your car payments, long term
credit card balances for a total of 36% allowable credit.
If you owe 15% in loose credit .. deduct that from 36% and your house approval amount
falls to 21% of your monthly salary vs house payment ..
GOOD LUCK !!!
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Expert
Posts: 1409
Location: Oklahoma | My brother lives in France now and him and his wife (she is from England) just bought a house. Tho he had already been there bout 7 years it took a lot for them to get a loan and if I remember right they couldn't get one til they was married. He had to convince them that he wasn't leaving the country soon. So not sure if that would make a difference in Canada and USA, Maybe depends on where you are a citizen? |
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