Mortgage Financing - Do your Homework!
Mortgage Financing - Do your Homework!
Just like the old days in California the Gold Rush is on again right here in Puerto Vallarta. This time the gold is real estate equity, of which there is an abundance here after 30 years of ‘all cash’ sales, scarce financing and burgeoning real estate development.
Gold Rush Days are Here Again
As with the old gold rush, the new one is attracting all kinds of entrepreneurs, the ethical and competent along with the opportunists. There are big players and small, some national brands and some local.
So if you are contemplating financing your dream home or vacation retreat, beware. Do your homework, or as we say in the industry, conduct your ‘due diligence’.
There are several mortgage companies advertising locally, so now at least you have a choice.
Here are some points to ponder. Ask your loan officer for some business references, people who have successfully done business with them before. They are few and far between now due to the infancy of the industry, but if the broker cannot name anyone, you should be concerned.
If you are dealing through a real estate broker, ask for a recommendation to a mortgage broker. They will be more familiar with the local business practitioners and will be inclined through self-interest to suggest someone with a successful track record. Puerto Vallarta is a ‘small town’ in which to do business. Unscrupulous operators have a short shelf life here.
Most of the lenders, brokers and borrowers are American or Canadian citizens and the business model is almost identical to the one back home, however there are no US federal protections provided here in Mexico.
The first step is to complete a loan application. This provides the lender with enough information to determine your creditworthiness. You will be asked to pay some fees in advance to cover the costs involved. These could include fees for a credit report and an appraisal. Credit reports are simple for the broker to obtain and are typically under $50. An American style appraisal here is more expensive than back home due to the lack of market information available. In my experience it takes three times as long to do an appraisal here resulting in costs in the $750 to $1250 range. There should be no fee for processing the loan application at this stage.
There are no ‘Truth in Lending’ laws applicable here in Mexico so no ‘Good Faith Estimate’ is required, but you should ask for and receive an estimate of costs and interest rate. Get it in writing, even though it may not be binding or enforceable. It will go a long way towards providing some peace of mind for you and credibility for the broker.
Before handing over your deposit money you need to know who is being entrusted to hold the funds. A large company likely will have a trust account set up at a local institution but a small broker may wish to hold funds in his own account. This would not be legal in the States and is not a good idea here. For your protection insist on the opening of an escrow account with a third party such as an attorney or title company. Both are well represented here in Vallarta.
When you are ready to commit, but before you make a final choice, evaluate the communication habits of the persons with whom you have been dealing. Insist on good communication. If you have not been getting prompt and courteous feedback up to this point, its unlikely to change.
Remember, the financing business runs on information. The more you can supply regarding your creditworthiness and the more you and your real estate broker can provide on the collateral property, the more likely you are to succeed.
Michael Read, is an certified appraiser in the states of Washington and Oregon. He has been visiting Puerto Vallarta now for a number of years, combining both work and play. Most of his work to date has been consultation, however, he is opening up to handle appraisals, now that mortgage financing has become more readily available in Mexico. He can be contacted at: mike@mikeread.com
Just like the old days in California the Gold Rush is on again right here in Puerto Vallarta. This time the gold is real estate equity, of which there is an abundance here after 30 years of ‘all cash’ sales, scarce financing and burgeoning real estate development.
Gold Rush Days are Here Again
As with the old gold rush, the new one is attracting all kinds of entrepreneurs, the ethical and competent along with the opportunists. There are big players and small, some national brands and some local.
So if you are contemplating financing your dream home or vacation retreat, beware. Do your homework, or as we say in the industry, conduct your ‘due diligence’.
There are several mortgage companies advertising locally, so now at least you have a choice.
Here are some points to ponder. Ask your loan officer for some business references, people who have successfully done business with them before. They are few and far between now due to the infancy of the industry, but if the broker cannot name anyone, you should be concerned.
If you are dealing through a real estate broker, ask for a recommendation to a mortgage broker. They will be more familiar with the local business practitioners and will be inclined through self-interest to suggest someone with a successful track record. Puerto Vallarta is a ‘small town’ in which to do business. Unscrupulous operators have a short shelf life here.
Most of the lenders, brokers and borrowers are American or Canadian citizens and the business model is almost identical to the one back home, however there are no US federal protections provided here in Mexico.
The first step is to complete a loan application. This provides the lender with enough information to determine your creditworthiness. You will be asked to pay some fees in advance to cover the costs involved. These could include fees for a credit report and an appraisal. Credit reports are simple for the broker to obtain and are typically under $50. An American style appraisal here is more expensive than back home due to the lack of market information available. In my experience it takes three times as long to do an appraisal here resulting in costs in the $750 to $1250 range. There should be no fee for processing the loan application at this stage.
There are no ‘Truth in Lending’ laws applicable here in Mexico so no ‘Good Faith Estimate’ is required, but you should ask for and receive an estimate of costs and interest rate. Get it in writing, even though it may not be binding or enforceable. It will go a long way towards providing some peace of mind for you and credibility for the broker.
Before handing over your deposit money you need to know who is being entrusted to hold the funds. A large company likely will have a trust account set up at a local institution but a small broker may wish to hold funds in his own account. This would not be legal in the States and is not a good idea here. For your protection insist on the opening of an escrow account with a third party such as an attorney or title company. Both are well represented here in Vallarta.
When you are ready to commit, but before you make a final choice, evaluate the communication habits of the persons with whom you have been dealing. Insist on good communication. If you have not been getting prompt and courteous feedback up to this point, its unlikely to change.
Remember, the financing business runs on information. The more you can supply regarding your creditworthiness and the more you and your real estate broker can provide on the collateral property, the more likely you are to succeed.
Michael Read, is an certified appraiser in the states of Washington and Oregon. He has been visiting Puerto Vallarta now for a number of years, combining both work and play. Most of his work to date has been consultation, however, he is opening up to handle appraisals, now that mortgage financing has become more readily available in Mexico. He can be contacted at: mike@mikeread.com
posted by La Punta Realty at 2:27:00 PM
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