Seven million North Americans travel to Mexico every year. Of that number, statistics indicate that as many as 400,000 Americans and Canadians have bought second homes or vacation properties in Mexico , with the majority investing in resort destinations such as Cancun & Playa del Carmen & The Mayan Riviera .

Traditionally, Mexico real estate purchases have been limited to investors with sufficient resources to buy real estate without need for financing. Unfortunately, not everyone can afford to pay cash for property in Mexico . So now that you've found your dream home - how are you going to pay for it? Fortunately, there are now several US-based mortgage companies that offer financing to qualified buyers who want to purchase properties in Mexico.

Real estate financing is a relatively new phenomenon in Mexico that extends the possibility of owning a home in Mexico to many who could not otherwise afford it. In the past, North American banks were reluctant to provide mortgage financing on Mexican properties due to the foreign investors' inability to obtain title to real estate within 50 kilometers of Mexico's coastline, which is where most foreign investors choose to buy property in Mexico .

To circumvent this limitation , the Mexican Government implemented a system whereby Mexican banks acquire the property and place it in trust for the sole use and enjoyment of the foreign property owner, or "beneficiary." The trust, called a "Fideicomiso," assures the foreign buyer of all the rights and privileges of Mexico property ownership, including the right to remodel, lease, mortgage, or sell the property at any time.

Terms of the trust usually extend to 50 years, renewable in 50 year increments, which allows the buyer to bequeath the property to an heir. Due to these changes, there are now several American mortgage firms that offer financing for values up to 80% of the  property 's appraised value.

Financing residences in Mexico have inherent advantages when weighed against the additional costs associated with mortgages, i.e., origination fees, discount points, bank appraisals and processing fees. All residential transactions in Mexico (regardless of who the purchaser is) require payment of a transfer tax on the declared value of the operation (which should be the purchase price and not what the seller or developer declares to minimize the capital gains tax,) notary fees, and recording costs.

These expenditures are the norm in any Mexican property transfer - and they are not inexpensive by U.S. standards. Foreign buyers must also pay for the permit from the Ministry of Foreign Affairs, a bank appraisal fee and an annual bank trust fee to administer the Fideicomiso. These expenditures are customary and required, but it should be noted that there is a distinct and protective benefit that purchasers receive in financed operations by foreign buyers.

US-based mortgage lenders want a higher standard of assurance that the loans they originate are secure and that the public deeds vesting the bank's lien interest are in fact valid and enforceable. In order to finance Mexican residential properties , there must be a transfer and conveyance to a Mexican bank trust registered by a Notario Publico, which establishes a recorded and renewable 50 year beneficiary interest for the non-Mexican buyer. A simple notation is made on the Mexican trust to protect the lender and provide the lender with sufficient collateral for mortgage financing.

Some lenders require title insurance through 1st american title insurance or Stewart Title, some require an application fee of 1.5%, and others ask for a flat $250 registration. Below is an example of mortgage financing lending rates, terms, and conditions for the purchase of property in Mexico . As in the U.S. and Canada, rates fluctuate with the market.

• Down Payment: 20% minimum, with better rates available with down payments of 30% or more
• Points: 2.5 to 5 points
• Interest: 9.75% to 12% start rates, with fixed and adjustable rates available
• Terms: 15 to 25 year terms available

Of course each lender is different and other fees may apply, depending on the lender you choose. Ricardo Barraza & Associates Real Estate and Investments has a thorough knowledge of the real estate market in the Cancun & Playa del Carmen & The Mayan Riviera area, and can help qualified buyers obtain a Mexican home mortgage through our association with lenders who have established Mexico lending programs for U.S. and Canadian buyers.

Financing in Mexico

REQUIREMENTS FOR MORTGAGE TRUST LOAN PROGRAM

Terms & Guidelines:      

• Our buyer-friendly “American-style” mortgage trust loan program is currently available to home-buyers at selected resorts and residential development projects in Central America and the Caribbean (Inquire with your real estate salesperson for details)
• By leveraging U.S. assets, this program provides affordable permanent mortgage loans when local bank financing would otherwise be unaffordable or unavailable
• This is different from a home equity loan and your assets are freed and returned after a period of seasoning
• Must be a U.S. citizen with U.S. assets, and net worth of at least the value of the vacation/retirement property
• Loan amounts: $150,000 to $2,500,000 USD
• 20- to 30-year amortization
• Interest rates: 7% to 9% fixed, depending upon creditworthiness
• 80% LTV; in some cases CLTV 100% may be possible
• Full-document loans; stated loans possible; loans are in U.S. dollars
• Construction to permanent financing available

Required Documentation

• Completed and signed borrower application (Form 1003) including complete list of real estate owned
• Authorization to check credit
• Completed and signed service agreement and disclosures
• Proof of income—Salary employee: W-2s for previous 2 years; complete 2 years of tax returns; last 2 paystubs; full verification of employment, work telephone number
• Proof of income—Self-employed: Complete 2 years of tax returns; CPA letter and/or reference letters, or other business documentation
• Proof of other income, such as rental income or fixed income: Rental agreements or tax returns to support other income
• Most recent monthly account statement from each mortgage account or asset account
• Purchase Agreement

for more information contact us

http://www.ricardobarraza.com/

CONTACT US and we will help you find the right property - and the mortgage financing plan that works for you.

Let's get together and talk about your home buying and/or selling plans. Call us at the US office at toll free : 1-866-587-2481
Cancun Mexico : 011-52-998-8840434
information@ricardobarraza.com or in CANCUN MEXICO or send us an e-mail we'll set-up a time that is easy and convenient for you to meet.

for information and assitance contact:

Ricardo Barraza & Asociados
CANCUN - RIVIERA MAYA - COZUMEL - COSTA MAYA
REAL ESTATE MASTER BROKERS
Playa del Carmen office address: calle 10 Norte # 149 Manzana 4 Lote 7
bewteen 10th Avenue and 15th Avenue
Downtown Playa del Carmen across the street from Pelicanos
Shopping Mall Municipio Solidaridad, Quintana Roo Mexico CP.
011- 52- 998- 577 1779 and 011- 52- 998-8840434
e-mail: ricardojbarraza@yahoo.com

http://www.ricardobarraza.com
http://www.playa-del-carmen-real-estate.com

Not only are we acutely focused on Customer Satisfaction,we guarantee it in writing. We encourage you to review our Buyer Services Guarantee and our Seller Services Guarantee

RB & Associates signs a contract with 1st Consultants Legal Team to asist all clients during their real estate purchase.

We provide free legal advice to all of our clients from a licensed attorney to ensure the security of their investment. We provide the presence of a licensed attorney at every closing¹. ¹ a licensed attorney provided by Ricardo Barraza & Associates (REALTY-ALLIANCE) is mandatory at all closings in order to protect and oversee both our client and ourselves.

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