The "Foreign National" program is available to HB1 or J1 Visa or other employer sponsored visa programs. Minimum down is 35%. Rates are less than 7% on a 5 year balloon amortized for 30 years. This product is very liberal with regard to income and assets. The house may be purchased for primary, secondary or investment purposes. Although the bank does not pay the loan officer a commission or referral fee, no up front fees are allowed to be charged to the buyer as this product is governed by Fannie Mae.
Other types of financing: Called private equity funds or Hard Money, this money is available to just about anyone for any reason (Real Estate, Aircraft, Watercraft, business ideas, start up companies, etc), regardless of where you live.
Mental Challenge: Your challenge will be accepting high interest rates, high costs to close and costs up front. These products are intended to help you get financing of the property. It's your job then, to find out how to pay them off in 5 years or less.
Legalese: Start with a Limited Liability Company (LLC) and use a Federal Tax ID Number (FEIN or TIN). The best way to start, however, is by opening a Family Trust and using the LLC within the trust to buy the property. This will give you the best protection against law suits. Once you get your LLC and TIN, ask the lender to report your payment history to the credit bureaus (Experian, Equifax, TransUnion) in order to start building your credit history here.
Funds to Close: You'll want to make sure that you have at least 40% of the sales price in your pocket before getting started. Not all of the funds are used for down payment, however, they may be used for other fees. Remember, the idea is to buy and sell properties until you've saved enough money for higher priced properties requiring higher down payments or for paying cash.
Income: Hard Money does not require you to show income, simply they want to know how you are going to make the payment (renting out the property or selling it right away). We'll coach you on that.
Expenses: Some Hard Money lenders or brokers charge fees up front. It can range from zero to $30,000 depending on the scenario. Other costs may be at closing as high as 20% of the loan amount (it's actually illegal to charge more than 8% of the loan amount). The title company will also have fees at closing. You may also have to pay for an appraisal. Hard Money loans lets you choose the appraisal. Some companies allow the Realtor to assess the value.
Some differences in Conventional (Con) vs Hard Money (HM)
Con: Required to have: Score, income, proof of assets, Citizen/green card/Work Visa.
HM: No score required, no income, no proof of assets, No citizen etc required.
Con: Property condition needs to pass underwriting guidelines
HM: No guidelines to condition of property
Con: Lender can pursue you in case of default (all loans are recourse)
HM: Lender cannot pursue you in case of default if non recourse loan is chosen
Con: No adverse credit with foreclosure/bankruptcy in last 3 years
HM: Credit is irrelevant but may affect interest rate or down payment
Con: Up to 40 years amortization. No balloon of loan
HM: Up to 30 years amortization but balloons in 5 years or less
Con: Low interest rates, no prepay penalties, no unreasonable up front costs, low cost closings
HM: High interest rates, possible prepay penalties, unreasonable up front costs, high cost closings
Con: As little as zero down (USDA), closes in 21 or more days (due to refinance boom)
HM: As little as no money down, closes in 10 days or more (zero down takes 30 days to close)
Con: Loan closes in your name with social security number
HM: Loan can close in business name with Tax ID or in own name with Social number
Con: Min loan around $40,000 but most bank min is $60,000. Max is $5,000,000.
HM: No minimum (but higher rate) and no maximum
Con: Real Estate Financing
HM: Financing available for just about any product
Con Commercial is very difficult to obtain with all the requirements, but rate is much lower
HM Commercial is very easy to obtain with less requirements but rate is higher