Mortgages for Canadians in United States - Buying USA Real Estate No Credit Score

Being Canadian and obtaining a mortgage from a US Bank while in the United States can be a challenge to say the least.  Sure the mortgage rates are super low, in some cases its advertised you can get less than 5% on a 30 year fixed loan but are the banks lending and are they lending to Canadians.  Your credit score, downpayment, current employment and income streams play a big role in whether you are accepted or not.  Gone are the days of stated income loans even with a 30% deposit against your home.  This makes things even tougher for self employed individuals to get a mortgage.  Canadians AKA snowbirds have always enjoyed heading south for the winter and have purchased or rented second homes in states like Florida, Arizona, California and elsewhere for sun and relaxation.  What about the Canadian that was temporarily transfered for work or has recently become a permanent resident. how do they go about getting a mortage in the United States to buy a home?  With the Canadian dollar a parity or a little stronger than the US dollar we are going to see more snowbirds and Canadians in general buying US real estate.  One problem Canadians are encoutering when applying for bank loans soon after arrival is the lack of a US credit score.  You could have a perfect score in Canada with Equifax and it really means nothing to banks in the United States, yes some say you can leverage it but the majority don't even like to consider  it.  Being debt free is also something that can hurt a new homebuyer.  Its a good idea to start building credit the minute you can, even though you don't need a loan take one in the form of a US credit card, line of credit or some other way to start building a track record of on time payments.  We've recently heard stories of not only Canadians but US citizens go to the local mortgage broker or lender to buy real estate only to be shut down and denied.  Its crazy, one person had a home conervatively valued at $700,000 with only a $100,000 mortgage.  In otherwords they had $600,000 equity in a home that already took the hit of the real estate drop.  The client wanted to buy a second home for $600,000 to live in the first home would be used as security on the second so essentially it would be like buying a 1.3 million home and putting a $600,000 deposit down.  They were denied. Regardless of the reasoning, if the buyer defaulted and the bank took over the property in a foreclosure situation and had a fire sale with $300,00 off the current list prices which were already depressed they would be ahead $300,000 there is no way they could make $300,000 in interest so why didn't they take the deal???  It makes you wonder how bad the financial situation really is, should we prepare for another meltdown.

In another situation a new construction home was priced out at 650,000 the homes across the street 3 years ago in the boom were going for 1.2 million and a few houses away homes were listed at $850,000 for a very similar model, location and neighborhood.  The home is obviously priced out at the low point in the market.  The Canadian buyers that have perfect credit in Canada, never missed a payment, recently sold their home in Canada coudn't get a loan because of no credit score available in the US.  They have no debt, high income and were going to put at least 30% cash down on the home.  They didn't get approved, that is a no brainer, no risk deal for the bank.  Once again if they defaulted which is highly unlikely, the bank could step in a sell the home for $500,000 and walk away with minimum $100,000 profit far more than they could ever earn in interest.  Where's the risk??  How bad is the financial problem, they say its a good time to buy, but is it really?  Why aren't banks lending on properties with large downpayments.  We are not talking an application for an interest only mortgage, we're talking lending money on a property where the bank got 30-50% downpayment.  We will be following these mortgage trends very closely.

If you have any information regarding Canadians getting bank loans in the US for a mortgage of a primary residence or second home that you feel would be useful please contact us.  The financial crisis may be worse than it is currently if banks are not lending on equity deals like these, it must mean they foresee another crash coming.  Maybe its because they are holding on to so many foreclosures and not releasing them for fear of a market collapse but eventually they have to let them go.

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