How to apply for a mortgage in the U.S. as an Argentinean investor

Argentine investors, drawn to the U.S. real estate market's vast opportunities, particularly favor Miami, where they stand as the second-largest group of foreign buyers with a robust investment of $366.8 million. Despite this significant activity, their median purchase price of $340,400 is among the lowest compared to other Latin American counterparts like Colombia and Brazil, largely because 90% of transactions are made in cash, likely due to challenges in obtaining financing. This cash-heavy approach, while showcasing their market presence, suggests a substantial untapped potential for financing to amplify Argentina's buying power in Miami. The U.S. market's appeal is underscored by its stability and potential for growth, especially attractive given the Argentine Peso's 76% devaluation against the U.S. dollar from August 2022 to July 2023. Addressing the financing gap could dramatically increase Argentine investors' ability to participate more broadly and competitively in the U.S. real estate market.

Before Applying - Budgeting for a Mortgage

Argentine investors looking to purchase property in the U.S. need to understand their financial leverage early on, making a prequalification or preapproval letter an essential step. Milo’s prequalification tool, designed specifically for the international investor, can provide a clear estimate of purchasing capacity, thus setting realistic property search parameters. Our online platform offers a streamlined way to understand investment potential in the U.S. real estate market.

For Argentine investors, planning for a property purchase in the U.S. involves considering several costs beyond the listing price. The norm for international investors, including those from Argentina, is a higher downpayment, typically between 25-30% of the property's value, reflecting the perceived risk by lenders. Additionally, closing costs, property taxes, insurance, and possibly homeowner association (HOA) fees are critical to the overall budgeting plan. These costs can significantly impact the affordability and financial planning for the investment. Notably, 90% of Argentine buyers in Miami opt for all-cash purchases, possibly due to challenges in qualifying for mortgages as foreign buyers. However, this trend underscores a significant opportunity for mortgage providers to cater to this market segment by offering more accessible financing options.

Finding a property

For Argentine investors, choosing the right location and property type in the U.S. is crucial and largely influenced by investment goals and budget constraints. The majority of these investors (74%) have shown a preference for condos, primarily due to their lower maintenance requirements and central urban locations, aligning with the 75% who purchase in central cities or urban areas. This preference reflects a strategy focused on rental income potential and ease of management. Furthermore, 86% of Argentine buyers intend to use their property for rental, vacation purposes, or both, with a significant majority (68%) specifically targeting rental opportunities.

The intended use of the property significantly affects loan eligibility for international clients. Given that most Argentine investors aim for properties to rent out, this necessitates a larger down payment but also opens up possibilities for specialized loan products designed for foreign nationals.

Overview of the U.S mortgage process with Milo

The mortgage application process, especially through platforms like Milo designed for international investors, is streamlined into several distinct stages, offering a clear path from initial interest to closing. Here’s a brief overview:

• Account creation: This initial step involves providing basic demographic and contact information, crucial for receiving updates and managing your application.

• Getting an offer: Taking less than 5 minutes, this stage gives a quick overview of potential loan terms based on preliminary information.

• Complete application: Here, additional detailed information is required to refine the loan offer.

• Secure your offer: Involves paying for the property appraisal, a key step in confirming the property's value and the loan amount.

• Validate your Information: Document validation to verify the information provided during the application.

• Schedule closing: The final step where closing dates are set, leading to the finalization of the mortgage.

The initial mortgage application stage is pivotal for international investors using Milo. It focuses on gathering vital financial details, such as "annual income and total liquid assets," to determine the best loan program. Full transparency in this phase is essential for tailoring loan options that align with the investor's financial situation and property goals.

Stage 1 - Initial Mortgage Applications Questions Explained

• Property Address: Essential for assessing the property's location, which influences loan terms due to varying real estate market conditions and property values.

• Property Type: Distinguishing between investment properties and others is vital as Milo specializes in loans for investment properties, which have different risk profiles and loan requirements.

• Type of Home: Whether it’s a single-family home, condo, or multi-unit property, this affects eligibility and loan terms, reflecting different levels of investment risk and potential returns.

• Purchase Price: Sets the baseline for loan amount calculations and influences the down payment requirement.

• Target Down Payment: Indicates the borrower's financial commitment and affects loan-to-value ratio, a key factor in determining loan eligibility and terms. A minimum of 25-30% is recommended for foreign nationals to align with Milo’s lending criteria.

• Target Closing Date: Helps align the loan processing timeline with the buyer's and seller's expectations.

• Initial Escrow Deposit: Shows earnest money committed, demonstrating the buyer's seriousness and can impact how total liquid assets are evaluated and is deducted from total loan costs within the loan summary.

• Expected Monthly Rental Income: Provides insight into the property’s income-generating potential, important for investment property loans.

-** HOA Fees**: Helps in understanding the ongoing costs associated with the property, affecting affordability and investment viability.

• Application Type: Applying solo or with a co-borrower can influence loan approval chances and terms.

• Property Ownership: Number of properties owned can impact lender’s confidence in the borrower's investment experience and financial stability.

• Income Source for Payments: Essential for assessing the borrower's ability to meet monthly payments and will help evaluate whether the client can rely on personal income or income generated from the property to cover the loan.

• Repayment Plan: Gives lenders insight into the borrower’s exit strategy, which is crucial for assessing loan risk.

• Passport + Immigration Status: Ensures the borrower can legally enter and leave the U.S. freely, a prerequisite for loan approval.

• FICO Score: While not mandatory for eligibility, a U.S. credit history can positively impact loan terms.

• Annual Income and Total Liquid Assets: Critical for assessing the borrower's financial health and ability to cover down payments and subsequent loan payments.

Each of these questions is designed to gather comprehensive data about both the borrower and the property, ensuring that Milo can offer the most accurate and beneficial loan terms tailored to the specific needs and circumstances of international investors.

Once the initial mortgage application is complete, the Milo online portal efficiently guides clients to the next crucial steps. It presents an overview of the most suitable loan programs, carefully aligned with the client's financial situation and investment objectives. Clients have the opportunity to review the terms and interest rates of each option, allowing them to make an informed decision on which program best fits their needs. Upon selection, a detailed loan summary is generated, providing clear insights into the chosen program.

Following this, clients are paired with a personal loan consultant from Milo. This expert will accompany them through the remaining stages of the process, from document verification to the final closing. This personalized guidance ensures that clients fully understand each requirement and timeline, making the journey from application to ownership as smooth and straightforward as possible.

Milo's online portal simplifies the U.S. mortgage process for Argentinean investors, offering a streamlined application tailored for international needs. With Milo, you're guided through every step, ensuring you find a loan program that matches your financial profile and investment goals. Consider Milo for your U.S. real estate ventures and start your application today for a seamless investment experience.

Source: Miami Realtors Report 2023

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.