Navigating the U.S. mortgage closing process as a foreign national
September 14, 2023 • 4 min read
The allure of the U.S. housing market to foreign investors remains robust. The United States presents a diverse range of real estate opportunities with historically stable property values and dynamic neighborhoods. According to a report by the National Association of Realtors, foreign buyers acquired $75 billion worth of U.S. residential property from April 2019 to March 2020. But, despite the appeal, the mortgage closing process can seem intricate. Let’s break it down.
Steps of the Mortgage Closing Process
A. The Role of the Underwriter and Post Application Process
Once you submit your loan application, it undergoes a series of steps:
Conditional Approval: The underwriter provides an approval, contingent upon certain conditions. Meeting Conditions: Typical conditions might include:
- Ensuring funds for the transaction are in the bank account within 10 days of closing.
- Submission of updated asset/financial statements.
- Provision of credit references, either through credit reference letters from financial institutions or credit card statements.
Final Approval: Once conditions are met and cleared by the underwriter, the loan gets its final approval.
Preparation for Closing: This involves:
- Balancing loan figures and fees between the lending closing agent and the title closing agent.
- Quality control reviews the closing package to ensure accuracy.
B. What to Expect on the Day of Closing
- The title company will request the closing funds for the transaction 48 hours prior to closing.
- On the day, participants meet at the title company or a location with a notary to verify IDs. The closing documents are then signed, and the title company sends these signed documents to the lender to initiate funding the loan.
- Once all is in order, the funds for the transaction are sent to the seller.
- This involves signing documents online in the presence of a notary/title company.
- While most documents are executed electronically, some require wet-signing on camera on the closing day, which are then mailed back.
Note: Funds aren't dispersed on the day of remote closings.
Types of Notarizations at Milo
TWIN: Traditional Wet Ink Notarization, which mandates the physical presence of both parties. PRON: Paper Remote Online Notarization involves a mix of digital and physical interactions. After e-signing some documents, others require physical signatures which are then mailed back for notarization.
Fees Associated with the Closing Process
While standard fees like Application, Appraisal, Origination, Title Insurance & Search, and Recording fees apply, foreign nationals might encounter added costs in th case of document translations.
Foreign nationals have a clear pathway and a fair amount of flexibility when aiming to invest in the U.S. property market. Knowledge of the mortgage closing process can transform this seemingly intricate task into a straightforward journey.
A. Can a foreigner buy an investment house in the USA? Yes, they can, following the prescribed process.
B. How do investment mortgages for non-US residents differ from those for foreign nationals? Terms and rates can vary, often depending on residency status and credit history.
C. Are there any specific fees for foreigners during the closing process? Yes. Additional fees may arise for services like document translation.
D. What is the significance of the underwriter in the mortgage process? The underwriter assesses the risk of granting the loan, ensuring all conditions are met and the information provided aligns with the lender's criteria.
E. Is a final walkthrough of the property mandatory? No, it is more related to the realtor's domain than the mortgage closing. For a personalized experience, consulting with a local real estate attorney or mortgage broker can prove invaluable for foreign investors.
National Association of Realtors (2020). "2020 International Transactions in U.S. Residential Real Estate. Source Link
The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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