This year is already shaping up to be the year of the boomerang buyer, or the repeat homebuyer.  As it is now seven years since the housing crash, there are many buyers who experienced a financial hardship in the recent past who are getting back into the market to purchase a home again in 2015.

There were several changes recently to the waiting periods when a buyer or homeowner can obtain a new mortgage and repurchase a home again after a foreclosure, short sale or bankruptcy.  Borrowers today essentially have three options when it comes to obtaining financing to purchase a home. In fact, more than 9 out of 10 mortgages are either funded by Fannie Mae/Freddie Mac, the FHA or VA. So, if you are looking to purchase and need financing, it is more than likely you will be using one of these three financing options and it is important to know the current waiting periods when you can repurchase after a hardship.

After Foreclosure:

• Conventional: Seven years. If you included the foreclosure in a bankruptcy, you can qualify after four years instead of seven years.
• FHA: Three years. FHA buyers can qualify again after just one year if they experienced an economic event.
• VA: Two years.

After Short Sale:

• Conventional: Four years.
• FHA: Three years. If the FHA buyer did not have any late payments before their short sale, they are allowed to automatically qualify again for FHA financing. There’s also a fantastic FHA program called the FHA Back to Work Program. If a buyer experienced an “economic event” whereby their household income fell by 20 percent or more for a period of at least six to 12 months, the agency has now reduced the waiting period to only one year.
• VA: Two years.

After Bankruptcy:

• Conventional: Chapter 7, four years; Chapter 13, two years.
• FHA: Chapter 7, one year; Chapter 13, one year.
• VA: Chapter 7, two years; Chapter 13, one year.

What if you don’t fit into these rules?

There are new mortgage options available for borrowers who do not fit these more traditional mortgage options above. Portfolio lenders are stepping in to provide mortgage options for buyers who cannot qualify for conventional, FHA and VA financing, and with terms much better than private financing.

There are lenders who will provide financing for buyers less than six months out of a foreclosure, short sale or bankruptcy. Of course, this does not come without a price. You need a larger down payment and rates will be higher than traditional loans.

Another part of the puzzle to helping you get in a position to repurchase again is ensuring you have also started to re-establish your credit since the financial hardship.

For example, even though the required timeline of say two or three years may have passed so you can qualify for conventional or FHA financing again, it is important you have also started to rebuild your credit and have the required credit scores to qualify again for financing. The FHA and VA only require a 580 credit score to repurchase again.

The first step is to get a copy of your credit report to verify if the financial hardship or discharge is reporting correctly and to also see what your scores are.

You can go to www.annualcreditreport.com to get a free copy of your credit report (consumers are allowed one free credit report per year).

Then the next step is to start rebuilding your credit scores.

Filed under: Blog, boomerrang homebuyer, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Relocation by Kim Bregman
Comments Off on 2015 – The Year of the Boomerang Buyer

For most people, buying a home is the largest and most significant purchase they’ll ever make. Hiring a real estate attorney early in the process will protect you against the unexpected, and ensure a smooth and low-stress closing. Every state and sometimes regions within states have differing requirements. Some states leave that as an option open to the buyer and seller while others mandate it as a necessity. Your local real estate agent should be able to advise you what the protocol is in the area in which you are buying.

A real estate lawyer will protect your rights and interests in the transaction…unless you are using an Exclusive Buyer Agent; they are the only party truly “on your side”. Hiring a real estate attorney is a smart choice.  A real estate attorney takes over after the selling price contract terms have established and all parties have signed.  They will review the contract itself, negotiate repairs based on the home inspection report, and collaborate with the title company.

A real estate lawyer has the experience and training to handle the unique issues regarding real property, and the problems most people can’t anticipate. They see a lot of contracts and know the local customs, and can help cut through roadblocks. In most states a real estate agents cannot draft changes to the contract or give legal advice and very few transactions fit into a “boilerplate” contract. In addition, most Realtor form contracts are drafted to the benefit of the Seller; an attorney will add language to further protect a buyer’s interests.

Your lawyer will review the purchase agreement during the contract review period and will check the fine print of the Conditions, Covenants and Restrictions (CC&Rs) in common interest developments like condominiums, coops, country club communities, developments, and townhome projects.

Your attorney works with your mortgage loan officer, the other party’s attorney and agents to make sure that dates are set for attorney approval, home inspection, title search, mortgage commitment and other contingencies are reasonable and achievable.

Your attorney will also review important documents, including legal descriptions, mortgage loan documents, the property survey, and the title and title insurance policy, and deed.

The attorney will inspect important documents for common mistakes such as typos and misspelled names, including the legal description of the home.

The bill of sale may be another important part of the transaction that categorizes and inventories any personal property, such as appliances or furnishings, that are to be included as part of the deal.

They are also extremely helpful in negotiating for unpaid prorated expenses due to you from the seller, such as: property taxes, condominium assessments, and utilities

In most states, attorneys can change legal language in a purchase contract and void a purchase contract under state laws. You might need this in case an inspection comes back with serious red flags such as mold, plumbing, or foundation issues.

Your attorney attends the closing, to ensure the process moves along efficiently and effectively. In the case of problems/issues, the attorney will counsel and represent you.

Your attorney has no direct emotional involvement in the transaction, and no conflict of interest. You’ll appreciate a levelheaded counselor by your side if the situation becomes difficult.

You’ll receive something of great value: peace of mind!

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings by Kim Bregman
Comments Off on Why Use a Real Estate Attorney

Hurricane hazards come in many forms, including storm surge, high winds, tornadoes, and flooding.  History teaches that a lack of hurricane awareness and preparation are common threads among all major hurricane disasters.  by knowing your vulnerability and what actions you should take can reduce these effects.  I hope you find this information informative.  Please bookmark this BLOG for future reference.

Checklists:

• Hurricane Preparation Tips: https://www.rapb.com/docs/articles/06-28–2015-rslc-article—hurricane-preparation-tips.pdf?sfvrsn=2
• Palm Beach County Emergency Supply Kit Shopping List: http://www.pbcgov.com/dem/hurricane/pdf/hurricane_supply_checklist.pdf
• Red Cross Supply Checklist: http://www.redcross.org/prepare/location/home-family/get-kit
• Digital Engagement Toolkit: www.ready.gov/ready2015
• CDC Checklist: http://emergency.cdc.gov/disasters/hurricanes/supplies.asp

Additional Resources:
(Includes Before, During, and After a Hurricane)

Before:

Apps:

• PBC DART: https://itunes.apple.com/us/app/pbc-dart/id526473189?mt=8
• Redcross Emergency: http://www.redcross.org/mobile-apps/emergency-app

Business:

• Business Planning: http://www.ready.gov/planning
• Protecting Businesses: http://www.fema.gov/media-library/resources-documents/collections/357

Evacuations:

• Evacuation Plan: http://www.redcross.org/prepare/location/home-family/plan
• Evacuation and Shelters: http://www.floridadisaster.org/disability/section1_2.html
• Evacuating Safely: http://www.ready.gov/evacuating-yourself-and-your-family
• Evacuation Zone and Route maps: http://www.floridadisaster.org/publicmapping/

Finances:

• Financial Preparedness: https://www.disastersafety.org/blog/top-10-ways-protect-home-wallet-hurricane-season/

Flooding:

• Flood Insurance: https://www.floodsmart.gov/floodsmart/pages/flooding_flood_risks/what_causes_flooding.jsp
• Preparing for Floods: http://www.fema.gov/media-library/assets/documents/13261?id=3262
• https://www.floodsmart.gov/floodsmart/pages/preparation_recovery/before_a_flood.jsp

Food & Water:

• Water: http://www.ready.gov/water
• Food: http://www.ready.gov/food

Homes:

• Securing Your Home: http://www.floridadisaster.org/securehome.htm
• Federal Alliance for Safe Homes: www.flash.org

Pets:

• http://www.ready.gov/caring-animals
• http://www.disastersrus.org/MyDisasters/pets/DIST_DisasterPetBrochure.pdf
• Horses: http://www.disastersrus.org/MyDisasters/pets/DIST_DisasterHorseBrochure.pdf

Pre-Season:

• Debris Cleaning Tips Before Storm (Pages 1-2): http://www.swa.org/DocumentCenter/View/103

Tips & Information:

• PBC Hurricane Preparedness: http://www.pbcgov.com/dem/knowurzone/
• Tips and Info: http://www.ready.gov/hurricanes
• Tips for people with Disabilities: http://www.ready.gov/individuals-access-functional-needs
• General Information: http://www.nhc.noaa.gov/prepare/

Weather & Forecasts:

• 2015 Hurricane Forecast: http://www.weather.com/storms/hurricane/news/hurricane-season-forecast-atlantic-2015-noaa-weather-channel-csu
• Severe Weather info(Supply Checklist on page 13): http://www.floridadisaster.org/swaw/2015/documents/2015%20Guide.pdf
• Latest Watches and Warnings – National Hurricane Center: http://www.nhc.noaa.gov/
• Pre Hurricane Season: http://www.swa.org/153/Before-During-and-After-the-Storm

During:

Food and Water:

• Food and Water During Emergencies: http://www.fema.gov/pdf/library/f&web.pdf
• Keeping Food Safe: http://www.ready.gov/food

Tips & Info:

• Before, During, and After Advice: http://www.fema.gov/media-library-data/253331ac179d32652a4d0cbf7fb3e6eb/FEMA_FS_hurricanes_508_8-15-13.pdf

Utilities:

• Turning off Utilities: http://www.ready.gov/utility-shut-safety

After:

Assistance:

• Applying for Assistance: http://www.fema.gov/apply-assistance

Clean up:

• Where to take Debris: http://www.swa.org/DocumentCenter/View/1182
• Debris Cleaning Tips(Pgs 3- 12): http://www.swa.org/DocumentCenter/View/103

Homes:

• Search for Rental Houses: http://asd.fema.gov/inter/hportal/home.htm

Search & Rescue:

• Informing Family and Friends of Your Safety: https://safeandwell.communityos.org/cms/index.php

Filed under: Blog, Exclusive Buyer Agent, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Maintenance, Homebuyer Advice, Real Estate by Kim Bregman
Comments Off on Hurricane Preparedness Kit provided by Optima Properties

Adjustable rate mortgages are loans with variable interest rates that change according to the market rates, as opposed to fixed rate mortgages, which guarantee a set rate for the entire period of the loan. ARMs may seem like a great idea some years, but in other years, you may wonder what you were thinking when you agreed to the loan.

Many financial experts advise home buyers to seek fixed rate mortgages. The set interest amount makes it easier to calculate monthly payments with no surprises. An adjustable rate mortgage can leave you with unpleasant surprises if the interest rates suddenly soar.

There are some pluses as well as minuses to adjustable rate mortgages. As with any financial decision, learn all you can about the topic and weigh the pros and cons carefully before choosing a loan type.

On the Plus Side…

ARMs may be good for buyers who plan to sell in a few years. If you know your job requires you to move every five years, an ARM may be worth the risk of interest rates rising, depending on the current rate.
Paying off your loan in a short time period may make an ARM better for some homeowners. For those who know they can repay the entire mortgage amount quickly but just need a short-term loan, ARMs may actually save them money.
Some ARMs offer a combination of adjustable and fixed rates. These may offer the best of both worlds, depending on market rates. For example, a mortgage may be fixed for five years, and then adjust annually.
On the Minus Side …

Interest rates may be low now, but that only means they’ll rise later. When interest rates rise, your interest rate rises too. Your monthly payments will increase. This may be a hardship for some people.
Adjustable rate mortgages may be saddled with a prepayment penalty. This means that if you suddenly come into a windfall and wish to pay your entire mortgage loan, you may actually be penalized for paying it off early.
ARMs can be difficult to understand. There are many variables, and you have to carefully read all the fine print to understand the nuances of a particular ARM. Fixed rate mortgages are a lot easier to understand: borrow this, pay that; it never changes.
Adjustable rate mortgages come in and out of fashion, but the truth is that you shouldn’t take out such a loan unless you understand the worst-case scenario and how it may impact your financial health. While they are not for everyone,

ARMs do offer some advantages, and those who can take advantage of these opportunities may find them useful. Talk to your lender about all the ramifications of an adjustable rate mortgage compared with a fixed rate mortgage.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Mortgage Information, Real Estate, Relocation, Uncategorized by Kim Bregman
Comments Off on Adjustable Rate Mortgages: The Pros and Cons

If you are hoping to become a homeowner, it is highly likely that you’ll need a mortgage. Before house-hunting ever begins, it is good to know just how much you can afford to borrow. All prospective homeowners must go through the process of getting pre-approved to see if they qualify for the loan and to determine how much you can afford to invest in a new home. New buyers can be understandably overwhelmed by mortgages in general, but knowing how to go about getting a mortgage before diving in is a good first step. Getting pre-approved is not as daunting a task as you might think.

Understanding your finances and the total cost of owning a home is key to determining your home budget. When figuring out what kind of mortgage payment one can afford, other factors such as taxes maintenance, insurance, and other expenses should be factored. Usually, lenders want borrowers having monthly payments exceeding more than 28% to 44% of the borrower’s monthly income. For those who have excellent credit, the lender may allow the payments to exceed 44%. There are many websites available to assist you in determining what the mortgage payment would be based on the amount borrowed and the interest rate. If you adjust the loan amounts and hit the search button, the monthly payment numbers will automatically update. Another factor in determining how much you can borrow is a direct function of how much cash you have to put down on the property.

Have you heard the terms “pre-qualified” or “pre-approved?” It’s important to know the difference. With a pre-qualification, the borrower and lender have discussed income, assets, and credit, but it is not formally verified. A pre-approval, however, is a formal review of the same things as a pre-qualification, as well as a review of the borrower’s full credit report. Having the pre-approval documentation is better because it is a true representation of the mortgage loan you are eligible for and is often required when submitting an offer on a home.

Through the credit report, lenders acquire the borrower’s credit score, also called the FICO score and this information can be acquired from the major credit bureaus TransUnion, Experian, and Equifax. The FICO score represents the statistical summary of data contained within the credit report. It includes bill payment history and the number of outstanding debts in comparison to the borrower’s income.

The higher the borrower’s credit score, the easier it is to obtain a loan or to pre-qualify for a mortgage. If the borrower routinely pays bills late, then a lower credit score is expected. A lower score may persuade the lender to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking on the borrower.

Many people have issues on their credit report, which they are unaware of. The first step in determining if you have any outstanding issues is to get a copy of your credit report. AnnualCreditReport.com allows you to see your credit reports from Experian, Equifax & TransUnion for free.

Next, it’s time for the paperwork. Gather and keep every piece of financial paper in the two months leading up to buying a house. That means pay stubs, bank statements for savings, checking and investment accounts, W-2s, tax returns for the previous two years, canceled rent checks and any mortgage or property tax statements for other property you own. Put these in PDF format to make it easier to send to your mortgage broker or bank.

In the months leading up to your home purchase, keep your hands off your finances. That includes moving money from a savings account into a certificate of deposit, or CD. It also means no cashing in investments from stocks, retirement accounts or CDs. Otherwise, you will create a huge headache for yourself as you try to show the bank the paper trail of where that money came from. In a similar vein, avoid paying off debts with savings because that could cause your lender to worry about how you will pay for closing costs.

Once you’re ready to start the pre-approval process, you’ll need to fill out the mortgage pre-approval application itself. Make sure you complete it as accurately as possible. The standard application asks for personal information such as financial account numbers and the desired borrowing amount, which is also called the target loan amount. It might seem unnerving to disclose your personal finance information and work history, but this is standard information that lenders use to assure you are financially responsible enough to undertake such a large loan. Working with a lender you trust will make sharing this information more comfortable. After you’ve completed and signed the forms, your lender will need to review and sign them and begin the loan approval process.

Once you get the Preapproval that means the lender will actually loan the money on a property based on your current financial situation after an appraisal of the property and a purchase contract and title report has been drawn up.

After you’ve finished your application and it is approved, you can begin to look for a home. Most mortgage pre-approvals are open for 60-90 days and after this time it expires. If your search extends beyond that, simply resubmit your application to refresh this term if you haven’t started the purchase process yet. Although getting a mortgage can sound like a lot of work, understanding what to do before starting your home search will only help ease the stress. The mortgage pre-approval may very well be the most important aspect of looking to purchase a home, as it helps define your price range. There are a few steps to the mortgage pre-approval process, so shopping around and working with a helpful lender you trust will only make the process easier and more productive for you.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Mortgage Information, Real Estate by Kim Bregman
Comments Off on How to Get Pre-Approved for a Mortgage

There is often a misconception of what a final walk through is and why it’s important.  A final walk through can sometimes be referred to as a pre-closing “inspection.”  Although you are probably excited and anxious to close on your new home, the final walk through is important and many things should checked and inspected and not overlooked.

The final walk through is NOT a home inspection.  In most cases, a buyer has had the opportunity to perform a thorough home inspection prior to finalizing the contract for purchase.  It is a common contract contingency that you should be aware of when purchasing a home. The final walk through is the time to ensure that the personal property items that were agreed to be included in the sale, are still present, that the condition of the home is substantively the same or better than the day you went under contract, check the functionality of the home’s features, and that any agreed to repairs have been made to your satisfaction.

Oftentimes, buyers negotiate sale terms to keep new appliances, light fixtures, window treatments and other installations as part of their purchases agreements. Bring your contract to purchase with you and begin your walk-through by confirming all agreed upon features are still present and in the same condition as the time of inspection.

When homes are transferred from a seller to a buyer, they are supposed to be in “broom-clean condition.”  The term “broom-clean” is a very vague, as it can mean one thing to the buyer and a different to the seller.  If there is garbage, boxes in the attic, old paint in the garage, or personal belongings from the seller in the storage areas or in the home, they should be removed by the seller at their expense prior to closing.  It is not the responsibility of the buyers to remove or dispose of the seller’s possessions that were not specifically identified as personality that was to stay with the property.

When a seller’s furniture is moved out, it’s much easier for buyers to recognize damages they may have overlooked during their initial inspections. Review surfaces, ceilings, walls and floors for any new damages such as scratched or soiled flooring and carpet, look for water damage, and cracked windows and walls.

Possibly the most important part of the final walk through is to complete a checklist of the home.  Your real estateagent should supply you with a thorough checklist and assist you with the walk-through.  The checklist should include, but not be limited to the following:

•   Check gas features, including fireplace inserts, stove and oven

•   Does the fireplace turn on with the switch

•   Do the burners warm when lit

•   Does the oven heat properly

•   Flip switches on the garbage disposal

•   Check all ceiling fans

•   Ensure the exhaust fans work properly

•   Check the AC and heat thermostats

•   Open the refrigerator; is it cool and cleaned out. Is the icemaker making ice?

•   Turn knobs on each faucet to test the handles work

•   Is the water warm indicating the water heater is functioning correctly

•   Is there proper drainage down each drain

•   Look below each sink for moisture or leaks

•   Flush each toilet and ensure they fill back up with water instead of running or leaking

•   Peer around bathrooms, kitchens, and laundry rooms for water damage

•   Check along flooring or base molding and spot any indicators of mildew or mold

•   Walk around the entire home testing each light switch

•   Are all switch covers present

•   Open and close every window

•   Make sure the windows and doors lock shut properly

•   If screens and storm windows are expected, account for each before moving to the next window.  If there are hurricane shutters that remain with the house make sure they are all in place.

•  Test to make sure the pool pump is running

•   Is the landscaping in good shape, has the grass been watered?

•   Check the garage door openers and try each control

•   Ring the doorbell

•   If an alarm system is included in the purchase agreement, test entry and disengagement

•   If the property has a sprinkler system, start it to make sure it’s functioning

•   Look at the exterior siding, roofing, chimney, or any other exterior features that the home may have.  If there has been severe weather recently this is extra important, as it’s not uncommon for roof shingles or siding to be damaged.

•   If there were items that were agreed upon between the buyer and seller to be repaired or fixed, make sure they have been completed.  A good buyers real estate agent should ask for receipts or records from any repairs that were agreed upon.

•   Look for owner’s manuals to accompany all appliances and remote controls for ceiling fans, lighting, sound systems or any other features.

Buyers agents can require sellers to meet the terms of the purchase agreement prior to closing or renegotiate new terms to cover costs of repairing any missing features or damages found during the final walk-through. This is often accomplished in conjunction with the buyer’s attorney.  If there are problems that arise from the final walk through, it’s important to address them quickly.  The final walk-through is the last chance for buyers to critically review properties before signing closing paperwork. Buyers who use the opportunity wisely tend to have the highest probability of buyer satisfaction

Filed under: Blog, Florida Real Estate, Home Buyers, Kim Around the Web, western north carolina real estate by Kim Bregman
Comments Off on The Importance of a Final Walk-Through

The obvious advantages to residing in Florida is the weather and no state income taxes.  Another lesser known, but equally as important, advantage is Florida’s homestead laws.

“Homestead” can be a deceptively complex issue in estate and tax planning when individauls finally decide to become Florida residents, including asset protection, property tax savings, and restrictions on the estate plan.

Florida’s asset protection for homesteads is anchored in the state’s constitution (Article X, Section 4). Homestead property owned by a natural person is protected from forced sale under process of any court or judgment lien (except for obligations relating to the real estate itself, such as property taxes, mortgage principal and interest, and contractors’ liens).

The asset protection for homestead includes land and improvements on the land, with an acreage limit of up to 160 contiguous acres outside a municipality, and one-half acre inside a municipality.

Florida also offers two sorts of property tax savings for homestead property: (1) the “$50,000 exemption“ and (2) the “Save Our Homes” limit on annual property tax increases.

The “$50,000 exemption” is a reduction of up to $50,000 in the assessed value of the homestead property. A homeowner can apply for this exemption by filing a Form DR-501 at the county appraiser’s office.

The $50,000 homestead exemption is helpful as far as it goes, but it doesn’t go very far.  The “Save our Homes” advantages for homestead property approved by Florida’s voters as a constitutional amendment in 1992 are much more economically significant. ” Save our Homes” limits annual increases in property assessments to the lesser of 3% or the annual increase in the Consumer Price Index.  Over time, especially when Florida’s real estate market is appreciating, annual “Save Our Homes” advantages can be substantial.

Filed under: Blog, Florida Real Estate, Home Buyers, Uncategorized by Kim Bregman
Comments Off on Florida Homestead Exemption Advantages

For many a foreign national, the United States has always been a great place to invest in.

Buying Real Estate in the United States does not give foreign owners any rights or privileges regarding legal stay or status. If you’re interested in staying in the states longer than allowed by a standard visa, contact an immigration lawyer.

By determining the primary use for your property and how long you plan to own it, you’ll be able to provide information to your real estate agent that will help guide the search and sale.

How will you use the Property?

Before you start your property search, it’s important to think ahead to how you’ll use the home once the deal is done.

• Will this be a vacation home?
• A home to stay in while doing business in the United States?
• A home for your children while they attend college in the States?
• An investment?
• An eventual long-term residence?

The way U.S. real estate transactions are carried out may differ from your home country. Each State in the US has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.

Several important U.S. real estate practices that are worth noting are:

• In the United States, real estate listing information is shared by agents using multiple listing services ( MLS) and consumers can access that same information using real estate sites such as com or Realtor.com. In many other parts of the world, real estate is a fragmented business and buyers have to go from agent to agent to find a property.
• In some countries, it is typical to pay a fee to the agents who are scouting properties on your behalf and showing you around. In the United States, the sales commission is paid by the seller who has a listing agreement with the Seller, so buyers don’t pay anything to have an agent work on their behalf if it is being advertised in the MLS system. It is always advisable for a buyer to work with an Exclusive Buyer Agent who will protect the buyer’s interest in the transaction. Make sure you ask any agent you contact what their “agency relationship” is to you. Each state has different forms of agency and many agents do not work for the benefit of the Buyer.
• In the United States, real estate agents need licenses to operate. The licensing laws of each state differ regarding how much education is required, the type and depth of licensing examinations, and whether continuing education courses are required once an agent becomes licensed. The licensing system was designed to ensure real estate agents are qualified to guide consumers through the maze of finding, evaluating and financing real estate.

Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods. It is recommended that you consult with an accountant and attorney before finalizing any transaction.

Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadru-plexes and townhomes. Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That’s because co-ops generally require that a buyer’s source of income be from the United States and that most of the majority of the buyer’s assets be kept in the U.S.

Financing or Paying Cash?

Qualified foreign buyers with a 30 to 40 percent down payment can often obtain financing for their U.S. real estate purchases. MANY BANKS REQUIRE FOREIGN BUYERS to have a specific amount ($100,000 or more) on deposit with the bank while others set loan limits of $1 million to $2 million. You may also be required to present a minimum of three months of bank statements.

The U.S. home loan market offers an array of safe, affordable mortgages, including some that will allow Muslims to buy a home without violating Islamic laws against paying interest.

Before applying for a U.S. mortgage, you must first establish credit and earn a good credit score. You can start building your credit score by opening U.S. bank and credit card accounts. You’ll also want to be sure to report all income on your tax returns. Lenders use this income information to determine how much money they’re willing to loan you to buy a home.

While you don’t necessarily need to be a citizen or even have a green card to buy a home in the U.S., you will need an Individual Taxpayer Identification Number.

All cash purchases are permitted, but U.S. law mandates that cash transactions over $10,000 be reported to the federal government. The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys and title companies). The government wants to know how you earned the money and that it was legally obtained. Cash buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.

Should I purchase U.S. property in my name?

Foreign investors can purchase property directly – in their own names – or through some sort of business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company.

How the property will be used should play into your decision. Additionally, the structure through which you purchase your property can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.

Do I have to travel to the U.S. for the closing?

While you may very well want to attend your real estate closing, it is not necessary. In the event that you cannot or choose not to attend your closing, you must execute a “Power of Attorney.” This is a written document authorizing another person to represent you and sign on your behalf.  Some lenders may require that you be present in the US to sign their loan documents.  This is something you should inquire about when selecting a lender if you do not plan on traveling for the closing.

How will a U.S. real estate purchase affect my taxes?

A foreign property owners’ tax liability in his home country will vary depending upon where the purchaser is from and whether that country has a tax treaty with the United States. Consult a tax attorney familiar with your home country’s treaty to get answers to tax-related questions.

The United States government requires that foreign nationals pay U.S. income taxes (state and federal) on any net income (rental revenues less expenses) received from rental property. If tax returns are not filed in a timely fashion, a tax of 30 percent of the gross rental income may be assessed. Even if you’re incurring losses in the early years of your investment and you don’t owe any taxes to the government, you still must file your tax returns in a timely manner or be subject to financial penalty.

What is FIRPTA?

FIRPTA refers to the Foreign Investment in Real Property Tax Act of 1980.  This ruling authorizes the United States to withhold income tax when property is sold, exchanged, gifted, transferred or liquidated by a foreigner. The Internal Revenue Service takes 15 percent of the proceeds and the state government will also take a percentage (if applicable). When a US tax return is submitted reporting the capital gains tax, if there is any refund due, that money will be refunded to the filer.

If the buyer of the home from the foreign national investor will reside in the home more than 50% of the time and the home sales price is under $300,000.00, the purchaser is not obligated to retain the 15% tax.

Filed under: 20 Blogs, Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, Foreign Nationals, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, International Home Buyers, International investors, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Relocation, Retirement, South Florida Real Estate, western north carolina real estate by Kim Bregman
Comments Off on The Foreign Buyers Guide – What you need to know about buying real estate in the United States