If you’ve been thinking about investing in a property in Mexico, but you don’t have all the money yet, this article may help you figure out how to proceed with Mexican mortgages.
The first question you probably have in mind is: What is a home refinance and how can this help in my situation?
A refinance basically consists of taking out a new loan with your property as collateral to pay off the existing one. Each bank and mortgage is different. You should contact your bank to ask what are the conditions for your specific situation. In this article, we will explain to you in more detail why is a very good idea.
Getting a Mexican mortgage with a bank is very different than refinancing your mortgage in the United States. Mexico has a financial profile that makes the interest rates so high that are less attractive for more developed economies as the USA or European countries. So before you apply for a Mexican mortgage you have to analyze all your possibilities with a professional with knowledge of Mexico real estate laws and strategies.
All about Mexican Mortgages
Mexican mortgages are not for everyone– since Mexican banks will often require a down payment of 40% or more, which is much more than the average home buyer in the United States would be comfortable with. Mexican mortgage rates are also higher because Mexican lending institutions have to charge what they call “risk premiums” to compensate for the greater risk that a particular borrower poses. For example, Mexican banks might offer an interest rate of 6%-14% instead of 2%-4%
However, if you’re looking for a vacation home abroad and don’t have all that much money saved up yet, refinancing your US mortgage loan with cash out can be an option worth considering, which we will talk about later.
Process of Buying Property in Mexico
The Mexican government imposes some obligations on sellers and buyers of real estate (like any other country). Mexican law also requires registering the sale with Mexican authorities (Notaries and SAT), which creates a process that you should be advised by a real estate agent who understands the process in Mexico, implications, obligations, and rights for their clients.
Before you start the process it’s important you talk with your real estate expert about your financial status. If you don’t have the cash, you can’t start your process of seeing properties until you have an approved mortgage or your refinancing.
Refinancing your Home in the USA for Purchasing Mexican Mortgages
Refinancing your US mortgage and purchasing property in México can be a great solution for buyers looking for a second home. You can also get creative with financing options if you don’t have that much money saved up yet – refinancing an existing mortgage loan with cash out is one option many people consider when they’re ready to buy a vacation or retirement home abroad.
Refinancing is the process of obtaining a new loan for the remaining balance on your mortgage in order to get better terms. The amount you can borrow, how much it will cost, and how long you have to repay are influenced by market interest rates. These factors change constantly so when rates are low, consider refinancing before you lock in a fixed rate since you’re not guaranteed those rates. In the USA, interest can be tax-deductible so filling out a mortgage refinance application is a good way to save money on taxes if your home equity loan will carry over from one property to another.
Cash-out from Refinancing
Once you’ve gotten your refinancing approved, now you have the cash you can pull out. You’ll need to figure out how to use that money with wisdom. As soon as you have the cash, you are ready to talk with a real estate agent, and start your searching. Be sure of don’t spend all that money without considering your closing cost!
Save some money! You can also decide to keep some of the money for any anticipated or unanticipated costs that might come up during your first months of living or maintain your Mexican property, like buying solar panels to save money on electricity, changing your air conditionate system, or furnishing your new home with your unique style.
As you can see, there are many possibilities when buying property in México with your cash out from refinancing. Each case is different so it’s important to talk with your real estate agent in México about your financial status and plan in the short and long term. It’s also important you understand the entire process, your agent has to be patient with you to explain any question or situation.
The decision to refinance your US mortgage and purchase property in México is a big one. It can be an excellent way of diversifying your investment, especially if you take advantage of the Mexican mortgages. If you need more information on an investment strategy or seeking a property with a high return on investment in Mexico, be sure to connect with Mexico Real Estate Experts.
