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Investing In International Real Estate: Morgage and Title Insurance

By Edited May 25, 2015 0 1

Jet set and globe trotting persons who live and make money in many different countries are becoming much more common these days. All the time more and more individuals are shaking off the shackles of the man and strike out on their own.

Running a company offshore and investing your wealth in international real estate as a property investor is a lucrative and tax smart move to make. In fact it could be considered one of the best forms of asset protection. However, there are some basic difficulties that you may encounter as you begin your offshore lifestyle:

  1. Getting a mortgage
  2. Insurance
  3. Being ripped off

This article will help point you in the right direction for when you encounter these situations.

Getting A Mortgage In Another Country


The U.S. is known to be one of the easiest places in the world to receive financing for real estate. Although, no matter how amazing your credit is in the United States, difficulties may arise when trying to get a mortgage in your country of choice.

In many parts of Europe and the U.K, it's not the fact that financing is not accessible for foreigners; it's more about the high interest rates and harsh terms. Also, in most popular Latin American destinations like Playa Del Carmen and Manzanillo and most of Mexico a similar thing happens. It is very difficult to receive a loan from the local banks and when you do find a way to obtain this loan, the interest rates are excessively high.

It may be wise to consider find a different way to fund your new purchase. Such as securing an equity loan on your home in the U.S., or taking funds from an IRA or another retirement account.

It can never be stressed how much research is involved in moving overseas. You may want to get out of the States, but you don't want to be over charged for a simple mortgage. So look into your options and once again, count the costs.

Importance Of Title Insurance


Do you really need title insurance for your real estate transaction in a foreign country? No, of course not. You could probably do without it in the U.S. too... except nobody would sell you real estate if you didn't have title insurance. What is title insurance anyway, besides another line item on the bill of sale that looks like a large number?

Title insurance provides you with insurance, or a relative guarantee, that it the piece of real estate you want to buy can actually be sold by the seller and purchased by you, with few problems. If there is not a "clear" title to the property, you would want to know that before it is too late. Right? If the research into the title for the property, by the title insurance company, discovers any unpaid liens against the property or any other kind of problem, you then have the right to walk away (or run away!) from the transaction. That is pretty powerful information to have at your disposal, and is usually only attainable by taking out title insurance.

There appears to be a common tendency among real estate agents in foreign countries to try and convince the foreign buyer that seeking title insurance is not necessary, costs too much, and is not important. There may be considerable pressure put on the potential buyer to accept their arguments. Why? Aren't the agents on your side of this transaction?

With rare exceptions the agent is usually out to help themselves. You are a step on that path. If the sale is delayed, or flipped, because of seeking title insurance, then that is unrealized money for the agent.

With this information in mind, consider making title insurance a non-negotiable point in the contract. No title insurance, no purchase. Yes, it may very well be the property of your dreams. However, would you want that dream taken away from you because of a technicality that could've been discovered early in the process? Probably not.

So be determined to spend a little bit on title insurance to secure your dream.

When in Rome... pay as the locals do


Saving money is of big concern to many people during these troubling times. One way to save money when moving overseas, is keeping in mind the common knowledge that no matter where you travel to, there are two different prices for pretty much everything. In some countries, when they see a foreigner their eyes light up with dollar signs. Meaning there is one price given to the local, and then a slightly more expensive price giving to a foreigner. The price differences can be substantial.

This is to be expected, but what can be done? One suggestion is using an intermediary, which may reduce the variation in prices. In order to find this intermediary, you need to either make local friends that you can trust, or ask a family member this is a resident in your country of choice. There are many benefits of having this intermediary present when buying property. Not only are you opening up the way to save money, but the intermediary can also serve as a translator, which will lessen the frustration of buying overseas.
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Comments

Mar 9, 2010 7:15pm
sound_foundation
Hey brawny, I like your writing, but again encourage you to get the typo in the title fixed in this article, too.
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