BUYING REAL ESTATE IN THE USA: WHAT SHOULD FOREIGN BUYERS KNOW?

 BUYING REAL ESTATE IN THE USA: WHAT SHOULD FOREIGN BUYERS KNOW?

For foreign investors, buying real estate in the USA is no easy feat, especially when it's their first time. Real estate practices and mortgage requirements in the United States are likely different from those in your home country. Investir US offers a handy guide to making an informed purchase, whether you're looking for a vacation home, a house you'd like to rent out, or a home you'd like to live in.

Get support from a real estate professional

When searching for, evaluating, and financing real estate, it is important to be accompanied not only by licensed agents with local expertise, but also by professionals who can advise you on the often complex transactions you may face as a foreign buyer.

If you don't know anyone locally, it's clear that building a qualified team will take some time. Take the time to do your research. Do as much research as possible before committing. Ultimately, the time you spend upfront will save you time during the purchasing process and, most importantly, less stress!

Who do you need to buy real estate in the USA?

Among the professionals you will deal with:

Certified International Property Specialist (CIPS) Buyer's Agent: Most licensed agents specializing in overseas real estate transactions have completed additional training to become Certified International Real Estate Specialists. Many are fluent in multiple languages and can also help you navigate state-specific rules and regulations.

Real estate attorney: In some states, buyers are required to hire a real estate attorney to handle the paperwork, while others only require a buyer's agent. In some states, there are "real estate brokers" in addition to agents.

The lending institution offering international services: Choose a bank that offers global services to help you better understand issues such as exchange rates, multinational taxation, etc.

A US-based financial advisor or accountant: A local financial professional will be helpful in your US real estate purchase project.

Tax advisor or lawyer: A tax specialist can advise you on the forms you need to submit to obtain your loan. You can also benefit from the professional's expertise to fully understand the tax implications and rules related to purchasing property in the United States.

To buy real estate in the USA, get your ITIN

The ITIN (Individual Taxpayer Identification Number) is the number you absolutely need to purchase real estate in the U.S. This number is issued by the Internal Revenue Service to individuals who are unable to obtain a Social Security number.

To obtain an ITIN, contact a Certified Accounting Agent (CAA) to complete Form W-7.

Documents required to buy real estate in the USA if you are not a citizen

To buy real estate in the United States, if you are not a US citizen, and in the event that you use a lending institution, you must present:

Your social security number or ITIN number

A valid foreign passport, U.S. visa, or driver's license

Your bank statements and, if applicable, financial records from your bank abroad

Proof of sufficient financial reserves

Your latest pay slips

Your credit score

Your tax return

The Importance of Credit History in the United States

To get a home loan as a foreigner in the United States, you must first establish credit and obtain a good credit score . The higher your credit score, the more favorable your home loan interest rate will be.

If you don't yet have a U.S. bank account or credit card, this step is important. It takes 3 to 6 months to begin building a credit history.

In addition to credit scores, most lenders also consider income information to determine loan eligibility. However, keep in mind that regardless of your employment situation, there are many ways to obtain a mortgage. A financial advisor and/or tax professional in the United States will be able to provide you with information on your options and the documents you'll need to move forward.

Before finding a lender, consult an advisor

When it comes to mortgage rates for your project to buy real estate in the United States, it's a good idea to do your research and compare before committing. An advisor will inform you about your residency status. Your conditions of residence and the length of your stay in the United States may affect the loans you're eligible for and the types of documents required to obtain the loan. Green card holders, permanent residents, and refugees are eligible for the same mortgages as U.S. citizens, but must provide additional documentation.

Depending on your situation, a larger initial deposit (30 to 40%) may improve your eligibility for financing. While it's possible to find lenders that charge less, it's up to you to determine what's possible based on the payment terms that suit you and the amount you need to repay.