FINANCING YOUR DREAM
As more and more Americans (and Mexican-Americans) acquire properties in Baja, the usual Mexicanmodel of cash purchases is being modified. For years, to buy a house in Mexico, the transaction had to be done in full in cash.
But in 1998, Banks from California, Texas, and Alabama (that’s right, Alabama!) entered the mortgage market in Mexico, and chances are good that additional lenders will enter the field.
Borrowers shouldn’t expect the same rates and terms available in the States. Interest rates on these loans are a pricey by US standards, often between 10% to 12%, and are usually due in 25 years. Because these lenders are entering new territory most loans max out at 70-75% of the value of the property. It is not the best news, but these new loans are a welcome tool for buying your piece of property in paradise.
PURCHASING YOUR HOME
When it comes down to buying the home of your dreams, and unless you are a native Spanish speaker, our advice is to deal with an American realtor. It doesn’t matter if he (or she) is located in the States or in Mexico, as long as you both share the same primary language. A lot can be lost in translation and in half-understood frases, and believe us, you need all the
possible clarity when it has to do with buying a Mexican house. To begin with, all legal paperwork has to be done in Spanish, so if your realtor is an American, he will obviously have an official translation of all documents, if nothing else, so that he can understand them himself.
There are also a series of small fees involved, that you will need all the help in the world to understand. Plus notaries to deal with, banks (to get a bank trust with), and all sort of signatures that will be needed. Your realtor will also be able to provide you with information on title insurance, a concept that is not widely spread in Mexico. Therefore, your best bet is to buy it thru a American-based company. There are not many companies offering this service, but the ones that are, are reputable, well established corporations.
A little known fact is that to have your bank trust processed, you will need an FM-T (tourist visa) or an FM-3 (yearly residency permit) from the INM (Mexican Immigration Department). These documents cost a couple hundred dollars, and are usually available within two weeks. We recommend you to get an FM-3. You will end up needing it to open a bank account, etc. Of course, your realtor will know where to acquire them, and how to expedite the process as much as possible). And since you are moving to a new city, it wouldn’t hurt to become friends
with your realtor, who will show you the best places to eat and shop at, and give you all kinds of hints on how to successfully become a happy member of the American community in the area. That is another point that makes similar idiosincracies (between your realtor and you) an important matter.
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