American in Europe looking to buy condo in Schaumburg. No credit in U.S how do I buy?

Asked by Kelly, Europe Mon Oct 15, 2007

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Ken Dooley, Agent, Chicago, IL
Thu Oct 18, 2007
Hi Kelly,

Here's the advice that I have given to past non-resident clients that have purchased in the U.S.

Not many local lenders offer loan products to buyers that live and work outside of the U.S who are looking to purchase for personal use/Investment within the U.S. Those that do have pretty straightforward loan criteria that need to be met:

1. Copies of recent bank statements from your local bank
2. Recent tax returns from your country of employment
3. Recent pay-stubs from your current employer
4. Proof of employment prior to closing
5. Sometimes verification of assets through a local Accountant letter if you're a business owner
6. Proof of funds for a downpayment (generally 25-30% of purchase price)
7. Proof of funds for 6-12 months of monthly mortgage payments

Rates tend to be pretty competitive even though not many lenders offer such loan programs (you may pay an extra 1/8% - 1/4% over the normal rate).

In addition, you must register for a T.I.N # (Taxpayer Identification Number) in the U.S (very straightforward).
You can't buy U.S property without a T.I.N number and it ensures Real Estate taxes, taxes on any income (less expenses) generated by the property and any Capital Gans taxes upon selling the property are paid.
In addition there's F.I.R.P.T.A (Foreign Invstor Real Property Tax Act) which mandates by Law that any sale by a non-resident of U.S Real Estate is subject to a 10% witholding tax of the actual sale price at close to ensure all taxes outlined above have been met during ownership of the property and none are outstanding at time of sale (it's the responsibility of the buyers Attorney to ensure the buyer witholds 10% of the purchase price from the seller at time of closing). If all taxes have been fully paid, the 10% is released upon verification.

It's easier than most people think for non-residents to purchase U.S Real Estate. Everything above can be handled by an experienced Realtor/Lender/Attorney just like any other Real Estate Transaction would be. So, the bottom line is work with someone who has done this before and can ensure the appropriate steps are taken to ensure the transaction is a smooth one. Feel free to contact me through my website link and I'd be happy to help you through the process and recommend a team to get the deal done.

Best of Luck.

Ken Dooley.
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Patti Pereyra, , Chicago, IL
Wed Oct 17, 2007
Hi Kelly,

I have worked with international relocations without USA credit, and the important thing is to have solid documentation of your financial solidity, letters of employment, and other proof that you are in a position to repay a debt, regardless of where your primary residence is located. However, I do believe your best bet is to consult with a US mortgage broker/financial expert before proceeding.

Not to self-promote, as I hope I am helping you with your question: I work with a Schaumburg mortgage broker (named one of the top 20 brokers in Chicagoland) who will be able to answer your financial questions regarding getting a loan in the U.S. without credit. So you know, I won't get anything from it; I just happen to trust his expertise and he happens to be based in Schaumburg.

If you would like the info, please click on my profile and email me.

Best of luck.
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Kelly, Home Buyer, Europe
Mon Oct 15, 2007
Thanks for your prompt replies! Yes the property is in IL and it is meant as a second home as I travel a lot to the U.S to visit family and friends. This info has eased my mind, I have not live in the U.S since I was a teen and was not if I would be able to purchase property in the U.S. while being a resident of Europe.

Thanks again, any more replies are welcome.
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Ute Ferdig, Agent, Newcastle, CA
Mon Oct 15, 2007
Hi Kelly. I am assuming you want to buy in Schaumburg, IL not Schaumburg Germany. That's not entirely clear to me as you are in Europe.
It sounds like you'll buy this condo as an investment and maybe you'll want to later use it as your primary residence. When you purchase without the intent to occupy the property as your primary residence, you are treated as an investor for lending purposes and you'll have to put more money down. Of course, if you have cash, you don't have to worry about any of that. You just have to find a way to wire the funds to the U.S. Usually there's no problem with funds received from Europe. You may want to speak to real estate agents that have experience in helping buyers in other countries purchase in the U.S. Many states also offer a designation that real estate agents can obtain when they meet certain requirements that show that they are specialists in international real estate sales. Good luck to you.
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Infinity Rea…, , Saratoga, CA
Mon Oct 15, 2007
There are programs out there that will let you buy a property with no consumer credit history at all. These loans are usually for foreign nationals, and usually require downpayments of 30%. The banks usually always will be really hard on verifying funds even, if there from a foreign bank. The patriot act is why they are so cautious on these loans and verifying the origin of the assets.
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Ken Herrera…, Agent, Las Vegas, NV
Mon Oct 15, 2007
Hello Kelly,

If you have a substantial downpayment, you may be able to purchase without having the credit. I would advise you speak to atleast 3 mortgage professionals in order for you to make the best decision.

Ken Herrera
Century 21 Infinity
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