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 Vallarta Living | Home & Real Estate | March 2006 
What You Need to Know about Mexican Mortgages
 Robin E. Reyes - TransWorldNews.com
| | New developments provide all the U.S. luxury ameneties you could imagine. |
The bottom line? Lending in Mexico has become more attractive to lenders and safer for consumers.
The number of Americans headed south is increasing exponentially as new developments are built that cater to the picky U.S. market. Sure, most people buy a second home in Mexico to be close to the beach, or to enjoy the lively and colorful Mexican culture and cuisine, but they also demand their luxury finishes. New developments provide all the U.S. luxury ameneties you could imagine.
As interest rate hikes slow the U.S. real estate market, people are flocking to Mexico for an investment they can enjoy. Most Americans that visit Mexico are not even aware that you really can own property in Mexico.
The days of the 99-year land leases are long gone and why get locked into some cheesy timeshare? With title insurance offered by reputable companies like Stewart Title and First American, your dreams of secure home-ownership south of the border can be realized. You can step right into the picture of all those appealing Corona beer ads that show Mexico’s seductive and tranquil beaches. All you need to make that dream come true is the financing.
Over 95% of real estate purchases in the Cabo San Lucas area are cash, according to recent studies. The figures for the rest of Mexico are similar. The demand for U.S. mortgages exists but the service and costs have turned many people away.
Here are a few tips before signing a sales agreement if you need financing:
1. Do your homework before you travel. Most lenders will only finance in certain areas. These areas are usually limited to the Cabo San Lucas area, Puerto Vallarta, Puerto Peñasco (known as Rocky Point), and Cancun markets. Some lender may go off the beaten path.
2. You may want to avoid mortgage brokers in Mexico. They tend to charge very high upfront fees, again a simple Web search for mortgages in Mexico should steer you in the right direction to help you get your best deal.
3. Be aware that you will probably not get financing higher than 70% of your loan to value. This is Mexico, not the U.S and you should plan accordingly.
4. Finally, you should take into consideration that since most lenders secure the loan against the property in Mexico, freeing up your assets in the U.S., that your interest rates will take into account this cross-border risk.
The instrument commonly used by lenders in Mexico to secure the property is a Fideicomsiso en Garantia or Guaranty Trust. This is basically a modification of the same trust that allows you to take ownership of your property in Mexico, but has the lien or guarantee built in through the life of the loan. Now you're ready to search for your Mexican Mortage! Hasta Pronto!
Mr. Reyes works for Silvergate Bank and is one of the leading authorities on cross-border lending. He presents regularly at industry conferences. |
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