Mortgages on Florida Homes- where are the mortgages?
Prices are too good to be true but mortgages are few and far between at the moment. As I write this, we are offering 50% financing on the purchase price right now for a detached villa in Central Florida and 70% in South Florida. By the time you are reading this, we may be back to 70% financing but lenders are still not handing out money for Non US resident mortgages.
I can hear you asking why and if it’s because lenders believe that property values are still dropping. Actually there is quite a bit of evidence that the prices have stabilized and in many areas, are back on a slow rise. If we consider that there were only 3-5 banks buying “foreign national” mortgages in Central Florida (many brokers but few actual lenders holding the mortgages), you will realize that they are still sitting on tremendous numbers of loans that they cannot liquidate. Some of these loans are not performing well and will ultimately go to foreclosure, but many are paying on time and should not be a liability. As we all know however, liquidity is key in times like this and nobody wants assets on their books that they cannot sell.
Foreign national mortgages have always been equity based with more weight being given to the property’s value as opposed to the borrowers’ strength. That is no longer true as both are heavily scrutinized now.
If you are interested in obtaining a mortgage, please be prepared to show very good reserves in the bank, the documentation required for a 50% mortgage is currently as follows:
· 2 years P-60 or 2 year Certified trading accounts if self employed
· A letter from your employer (acct if self employed) stating 2 years income and probability of continuation
· 2 months bank statement
· A copy of your passport
· Detached Villas are the only property type that is currently compatible for a mortgage
If you can pay cash, there are fabulous deals to be found (I can’t believe that came out of my mouth as a true supporter of leverage!) Alternatively, raise the money at home and come with cash.
The situation with lending will improve and I believe soon, but for now… please do your homework before finding the deal of a lifetime and realizing that you can’t have it!
Example 2005 2009
Purchase price $400,000 $280,000
Mortgage $320,000 (at 80%) $140,000Deposit $80,000 $140,000
