Yes, there is an alternative to paying cash for property in Mexico, and it is not a high rate Mexican Peso loan. US dollar loans are now available for financing property in Mexico, and American and Canadian citizens are offered attractive loan programs which make owning a vacation home easier and more affordable than ever. These new financing options have opened the door to create new opportunities for buyers to enter the vacation home market.
When utilizing financing, buyers can increase their purchase price range for a greater selection of properties. In addition, buyers can retain their cash as a liquid asset rather than tying it up in one property. These loans collateralize the property in Mexico, but are not attached to any other assets or primary residence in the United States or Canada. A buyer can even draw on equity from the US or Canada to assist in their financing, or benefit from cash out refinancing.
While the US lending market has been struggling, conservative lending guidelines in Mexico have kept the real estate market stable. The loan products currently available require a minimum of a 25% down payment which maintains a positive equity position on the property, and reduces the risk of loan default. To qualify, lenders require a credit score of 680 or higher and proof of income verified by tax returns or alternative documentation. Borrowers are qualified by having a low debt to income ratio which insures the buyer can afford the property and minimizes risk to the lender.
There are a variety of loan programs to choose from, including amortization terms of 10, 15, 20, 25, or 30 years. There are fixed rates, as well as 3 or 5 year adjustable rate options, with minimum loan amounts starting at $50,000 and going up to 5 million. At the time of this publication, rates averaged from 6% to 8.99%. These rates are an attractive alternative to the Peso financing offered at 11% and up. Eligible properties include single family homes as well as condominiums, and lenders require that the property be located within the city utility grid. Alternative finance options are also available for construction loans, home site lot loans, and refinancing. On average, the loan and closing process generally takes 60 to 90 days to complete so if financing is required for your purchase, it is recommended that buyers pre-qualify prior to viewing property and submitting an offer. It is best to inquire with your Dream Homes Realtor for more information or to pre-qualify.