20 May 2008 89 views One Comment

Getting a loan for Mexico real estate is no longer the brick wall it once was. Traditionally people in Mexico either paid cash for their homes, inherited their home, or built one themselves and home loans were virtually non-existent. The banks that did offer loans had high interest rates that discouraged foreign home buyers from migrating to a sandy Mexican beach.

But thanks to a variety of factors such as an increased demand of American’s desiring to live in Mexico, American companies have been prompted to provide loan services. Just in the past decade, GE and GMAC started offering loan products with interest rates starting at around 8%. These services are so new that there isn’t a lot of the mortgage speculation that has plagued the US market.

According to an interview of Russ Schreier, CEO of Finance North America, the loan process is identical to the process in the US, since they are looking for the same things. He explains that transferring the title is a much bigger obstacle than securing financing. The loan officer would want to make sure you have a clear title transfer, as the home is considered collateral for the loan. Schreier also sees interest rates coming down in the next few years, as competition increases and the loans are securitized. The down payment his firm required was as low as 20-25%.

An interesting side note is that ownership through a bank trust or fideicomiso allows for a nonjudicial foreclosure process. If you don’t make payments on your mortgage, your home can be sold.

Source: Interview with Russ Schreier by NuWire