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Getting A Mortgage in the USA

Mar 2, 2008
The United States of America is located on the North American continent with Canada located to the North and Mexico to the South. The country is comprised of 50 contiguous states, two states not contiguous with one located west of Canada and another in the Pacific Ocean. There are several territories. The United States is a federal constitutional republic with its capital located in the administrate district referred to as the District of Columbia.

The economy of the United States is the largest in the world and has a GDP of over $13 trillion. Its economy is market based and is comprised of a full range of industries, both service and durable. The banking system of the United States is well developed and offers a full range of investment opportunities. Within the mortgage lending business the following loans are available:

For purchase

Re-mortgage

Self build

Equity release

Variable

Fixed

Interest only

Land loans on a case by case basis

Options

The loan to value rate found within the United States is an option depending upon the type, value and location of the property in question. An 80 percent loan to value option is available for non-status loans for second home purchases. A 75 percent non-status loan is available for to-let properties and a 90 percent to value loan is available in the State of Florida.

Interest rates are largely fixed but can vary depending upon the type of mortgage that is chosen. Other than in the State of Florida interest rates currently range from 7.5 to 7.8 percent, although researching a particular type of loan can bring these rates lower. The maximum term for a loan is 30 years with no age restrictions place on the age of the borrower at term completion (a unique event in mortgage lending.)

Documentation is fairly straight forward and strictly adhered to. A lawyer is advised for the transaction. The following minimal documentation is required:

Completed application form

2 open credit lines for 24 months in some cases

2 bank reference letters

Passport copy

Proof of down payment, closing costs, six months mortgage payment reserves

Copy of purchase contract

For all documentation, letters to be on bank letterhead with clients name, account number, balance and date account was opened clearly stated. Letter must be signed by appropriate bank representative. This last need should be underscored. It trips borrowers up a lot.

In the state of Florida there are some specific considerations to consider. They include:

Dollar and Sterling mortgages are available

Equity release of up to $125,000 is available

Up to 90 percent of loan to value is available for foreign nationals

Starting as low as 1.45 percent variable interest rate

Although rater strict in the interpretation and execution of its lending laws the United States offers a wide variety of options. There has been an increase in the types of products being offered with some offering great rewards. There have, however, been some new products offered that were not 100 percent understood by the borrower, resulting in financial difficulties into the future. Understanding the ramifications of the product is an important step with so many products being offered.
About the Author
Leo Fogarty is Marketing Director of the mortgage specialists Euromortgage. He is also a regular author for financial magazines, most notably Property Gallery Magazine in Ireland and is an expert on mortgages , remortgages , equity releases and overseas mortgages .
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