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by Enrique (Henry) Saldana
While one of the main lenders for purchasing property in Mexico has dropped their interest rates to a 5.25% ARM, and a 7.0% 30 yr. Fixed Rate, the other one, while toughening up some of their credit requirements, allows a more lenient and creative process for Americans and Canadians purchasing property in Mexico.
But which is better, a lower credit rate, or a less stringent process?
So here is a comparison chart for both lender's processes and requirements. We will call them Bank A and Bank B.
Bank A:
A Fannie Mae/Freddie Mac American-based underwriting process with all required disclosures based on USA American Financing Law Requirements
Verification of Funds (source of funds required for closing and verification)
Verification of Deposit (copies of money transfer slips for deposits)
VOE (Verification of Employment)
Tax Returns for Self-employed (personal and corporate with all schedules – Schedules are deductions on the tax forms)
Pay stubs and W2s for employed individuals
Mortgage gets recorded in the USA and consequently reflected in the client's credit report
Bank B:
A Mexican lending-based underwriting process with limited documentation requirements
No Verification of Funds (source of funds is required, other than ensuring that funds are legit/legal)
No Verification of Deposit (no paper trail required)
No VOE, provided copies of actual employment in their country of origin is provided
Generally speaking, personal tax returns and/or bank statements are the only requirements for self-employed
Pay stubs only requirement for employed individuals
Mortgage gets recorded in Mexico, not outside of Mexico, consequently it is not reflected on the client's credit report in his country of origin.
When analyzing the above information and putting it in laymen's terms, I would venture to say that we are looking at what we call Conforming and Non-conforming Loans in North America for the lending practices for both of the above mentioned lenders. (North America, by the way, is a term I have learned to use in Mexico when referring both to Americans and Canadians in general, as in the North American Continent. Although, technically speaking, Mexico is also part of the North American Continent, let's keep it at that, for the sake of argument.)
So, what are Conforming and Non-conforming Mortgage Loans?
Conforming Loans Defined:
Conforming loans are loans that meet Fannie Mae and Freddie Mac underwriting guidelines. You may want to get a conforming loan because rates are lower, provided all other requirements are met.
Non-conforming Loans Defined:
A Non-conforming Loan is a mortgage that does not meet the lending guidelines of Fannie Mae or other major secondary mortgage market participant such as Freddie Mac. These loans tend to have the least stringent qualifying criteria.
In conclusion, when looking to apply for a mortgage loan in Mexico, you may want to see yourself, and/or your client, as Conforming or Non-conforming Mortgage Loan material. This will ease and simplify the mortgage loan application process and will help you get better results. Interest Rates are not always the only parameters to consider when applying for a Mortgage Loan in Mexico!!!
Mexico Realty Solutions – Mortgages "R" uS: A True One Stop Real Estate Company in Mexico. Feel free to contact us at: moneylendingbus@hotmail.com, www.mexicorealtysolutions.com
Tel: 984-147-0100
Cell: 984-111-8743
Skype: Henrys1955
And check the new Mexico MLS Network system: www.mexicomlsnetwork.com. WE NOW SPEAK FRENCH!!!
Enrique (Henry) Saldana
Mortgage, Real Estate, and Business Consultant
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