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Financing Options for Foreign Nationals Looking to Buy in the Bay Area

There appears to be a growing number of foreign nationals purchasing real estate in the San Francisco Bay Area and most are closing their transactions with all cash. Even wealthy overseas buyers may prefer financing a percentage of the purchase price rather than liquidating their accounts, or would otherwise consider a higher purchase price. The process of securing financing is a bit more complicated, but generally not too difficult, and can be worked through with reasonable speed. Foreign nationals will need to substantiate their income through income tax filings from their native country or, when unavailable, verify income through alternate means, such as with bank statements showing consistent deposits, a letter from their accountant, etc.  Since they will lack the generally required U.S. credit report, our investor allows for international credit reports or a credit history that is supported with verification of timely payments of overseas' car loans, credit cards, rent or mortgage payments.  Financing options are typically limited to 5, 7, or 10-year fixed ARMs (Adjustable Rate Mortgages) with fixed rates during the initial 5 to 10-year fixed period. Interest rates and fees are reasonable and far more competitive than private or hard money loans. Here is a breakdown of loan sizes and available percentages of financing:
  • 60% financing on loans between $300,000 and $2,000,000
  • 55% financing on loans between $2,000,000 and $3,000,000
  • 50% financing on loans between $3,000,000 and $5,000,000
Foreign nationals do not need a visa or social security number and the properties are purchased as second homes. Since more time will be needed for work on establishing a credit history and/or translation of documents, it is best to begin work early.

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