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Buying a Home in the US: Everything You Need to Know

Legal & Finance
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Whether you’re new to the USA or have been living there for a while, buying a home is an easy process to undergo and there are required steps you can follow so that you can buy your new home easily. You can often pay cash since it’s a much easier, quicker process.

Before you start looking for your new home, you should start by finding the right professionals to guide you through the process, including a real estate agent and an attorney with experience in working with foreign homebuyers. The easiest way to find a good agent is through referrals, and The National Association of Realtors has lists of agents on its website, that are certified “international property specialists” capable of working with foreign buyers. Ensure to chat with the listing agent at the open house. Most of the agents who represent foreign buyers also know attorneys, loan officers, and accountants to help you through the process. To successfully buy a home in the US, there are certain facts you need to know:

THE BROKER works for you at no direct cost and will shepherd you through the process from the first open houses until you close on the sale. Your broker will help you to negotiate and navigate any sticking points along the way. To find the right broker, talk to friends and listing agents at open houses, and look out for agents with expertise in the neighborhoods you like. You can also try an agent matching service. Remember that sellers, not you the buyer, pay the broker fee.

THE LENDER: If you need a loan, shop around by talking to lenders at banks both large and small, and to mortgage brokers.

THE LAWYER: You will need a real estate lawyer to negotiate the contract, review the building’s financial statements and the board minutes so that you make sure there are no violations against your apartment. Your lawyer will order title insurance and will work with your lender to make sure you close on time. Get referrals from your real estate broker, friends, and colleagues. For your lawyer’s fees, you should estimate a payment of about $3,000.

CLOSING COSTS: These are the fees, taxes and insurance payments due when a buyer signs a mortgage and takes possession of the property and these costs vary based on the purchase price and mortgage size of the house but are often total in the five figures. These costs are substantially higher for condos and houses than they would normally be for co-ops.

SOME CUSHION: Ensure that your savings account has a little cushion in it for any unanticipated costs as many apartments need tinkering. For example, the living room may be avocado green or the furniture may need changing. Make sure you set aside extra money for a fresh coat of paint, a new kitchen backsplash or a new sofa to make the place a little homier.

To get approved for a U.S. mortgage, banks would require that you have a good credit history and they will not consider the credit history you have built up in your home country. Thus, prior to getting a mortgage, you should start building your credit score as soon as you can, get your paperwork in order as early as possible. You can build your credit score by opening a U.S. bank account, a credit card account and ensure to document your income on your tax returns. Lenders, condos, and co-ops would ask for your financial information like tax returns, pay stubs and bank statements. Co-ops will also want personal reference letters. Figure out who will write those letters long before you find your dream home. If you need a mortgage, ensure to avoid sudden changes 60 days before you close — so no new jobs, new cars or big purchases. Also, be prepared to explain the source of amounts deposited into any of your accounts during this period.

As a foreign buyer, you should expect to pay at least 30 percent of the value of the home as a down payment. The borrower will be asked to provide documentation to show sufficient income, bank statements, reference letters from their banking or credit institution, and two forms of identification. Your lending institution would inquire about your borrower and will conduct detailed reviews of your borrower’s income and asset documentation. This review sets to look for transparency of your borrower in order to get an understanding of where (and) how their income and wealth is generated and how their assets move around. Depending on your nationality, your visa will be required as well as a copy of their passports (and) a B-1 or B-2 (visitors) visa.

Because the field, for the purchase of homes, is crowded, you can do anything to shine and make a difference. In as much as cash is the king, however, there are other ways to get attention. You can write letters or sing the praises of the apartment you hope to buy.

Phani Chakradhar Chowdary