Monday, November 19, 2018

Making the move? What to know before you buy American real estate

The currency exchange rate between the U.S. and Canada doesn’t look good for Canadian buyers right now. But where real estate is concerned, the market is still attractive, says Alain Forget, the head of business development at RBC Bank (U.S.)
It’s particularly appealing and even affordable in the sunniest locales, from Arizona to South Carolina, where you can find properties for as low as USD $150,000, he says.
“The real estate market — especially in the Sunbelt states — is very compelling,” says Forget, a Canadian expat who also has his real estate license in the state of Florida.
Last year, Canadians purchased $10.5 billion in real estate south of the border, according to the annual survey from the National Association of Realtors (NAR).
A whopping $4 billion was spent in the Sunshine State alone. Arizona was next with $1.5 billion, followed by California where Canadians spent just under $1 billion.
Wherever you choose to land, finding a bank or lender in the U.S. that has the expertise of working with Canadian clients can be difficult. Without a social security number and means to verify your credit score, it can be difficult to secure a mortgage.
That’s where RBC Bank can help with a team of dedicated mortgage specialists trained specifically to deal with Canadian clients.
Canadians may be able to find American banks or lenders that can provide mortgages to non-U.S. buyers, but that will typically come with a pricey catch called a “foreign national premium.”
In other words, they may bump up your interest rate by as much as 1.5 to two per cent because you’re not American. The interest rate on your loan could end up topping six per cent, says Forget. A lender like RBC Bank, built exclusively for Canadians, won’t charge this premium.
Don’t get lost in translation
Finding a bank or lender with seasoned experience working with Canadians is vital to making a seamless transition into the U.S. real-estate market. You might speak the same language, but some terms and conditions differ across the border.
“The process is different,” says Forget. “For example, it could take 30 to 45 days to get a U.S. mortgage, whereas in Canada it could take as little as four or five days.”
States will have various taxes added to the costs of home buying, such as the “stamp tax” in Florida, which are incorporated into closing costs. American lenders or banks without knowledge of the Canadian market might not know how to translate this tax for a Canadian buyer.
In addition to closing fees, many U.S. lenders charge an “origination fee” which is about one per cent of the loan. That means a borrower can be charged $2,000 on a mortgage of $200,000.
“We’re here to help Canadians get access to U.S. financing,” Forget says. “It’s a different country. In many cases, there are different laws, rules, regulations and practices. What we bring to the table is not just a mortgage solution, but a network of resources that Canadians can tap into for advice.”

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