Can You Use Foreign Currency to Get a Mortgage?

Is your down payment coming from abroad?

Do you have a foreign bank account that you’re showing on your mortgage application?

Are you obtaining a gift from a family member in another country?

These are all questions that might come up when we’re working with our clients who may be employed by a foreign company or who may be permanent residents (green card holders) or non-permanent resident aliens of the United States. The question really becomes, “Can I use a foreign currency to qualify for a mortgage?” We’ll look at some of the key points to navigating these international waters and assuring safe passage to home ownership here in the US.

Document Everything

Just like with domestic bank accounts, we’re going to ask you for at least two months of bank statements to support the amount of money in any account. If these statements are not in English, translation will be required. Again just as with US bank statements, if we see large deposits into the account, we’ll question their origin and need to “papertrail” how they got there.

Funds Must Be Moved to the US

Here’s perhaps the most important distinction between using US and foreign funds for a home loan transaction:  Your foreign funds must be moved to the US to be considered acceptable assets for down payment, closing costs and for reserves (more on this later). So at some point, it will be required that you convert your money to US dollars and transfer it to a US bank account. Be sure that the timing of your loan transaction works with your plans to move the money you have abroad and make sure you understand the process required by the banking institutions (and any limits for movement by the governments involved).

Allowable Institutions

Check with your lender early in the process to be certain that, for any foreign funds you plan to use, the country of origin is not sanctioned by the Office of Foreign Assets Control (OFAC). As of this writing, countries on the OFAC list are the Balkans, Belarus, Burma, Cote D’Ivoire, Cuba, Democratic Republic of Congo, Iran, Iraq, Liberia, North Korea, Sudan, Syria and Zimbabwe. This list will change periodically.

Foreign Reserves?

If seeking a jumbo mortgage, asset reserves are required. In most cases, it’s not possible to use foreign assets to meet a reserve requirement. In order to cover reserves with a foreign currency, borrowers would most certainly need to consider moving the money to the US first.

We’ve successfully helped buyers use funds held in foreign accounts to obtain FHA, conforming and jumbo mortgages in the United States. But their use definitely requires some additional planning and documentation — in addition to a currency conversion. We’re available to help make sure your foreign assets are moved and documented in the most efficient manner and that your escrow closes smoothly and on time. Regardless of your time zone, call on us if we can be of service.

Buon viaggio,

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
Cell/Text:  415.367.5959
rob.spinosa@rate.com
NMLS: 22343

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Still Think You Need 20% Down? Ain’t That a Shame

Back in late 2017, with the passing of Fats Domino, we lost a rock ‘n’ roll legend and pioneer.

 

But nearly every week we lose transactions simply because of the unquestioned and untested myth that every buyer needs to bring in at least a 20% down payment, especially here in California where many of our home prices require loans that exceed the conventional and FHA loan limits. In addition to simply not recognizing that many great programs exist in order to accommodate a 10% down payment on a jumbo mortgage, here are the two other challenges we commonly see:

Getting Approved

Putting down 10% means borrowing 90% and that translates to a larger housing payment and a higher debt-to-income (DTI) ratio. I’d say that my team and I are the best in the west when it comes to understanding the programs available and the parameters our clients must meet in order to become approved borrowers. Sometimes you not only have to think outside of the ordinary credit box, you have to approach future success as if no box exists. While many of our competitors will try to shoehorn a buyer into a 20% down mortgage by having them ask family for gift funds or by suggesting they raid their 401K accounts, we’re going to focus first on what a buyer can do on her own and we’re going to determine the outside limits of her qualifying power. From there, this buyer can determine a responsible budget and strategy, but do so with more cards on the table.

Getting Into Contract

Once we have a loan pre-approved (or underwritten in advance), our next challenge will be to have our buyer’s offer seriously considered alongside the others that may come in on any desirable property. Here, we may encounter a listing agent who wants to take no chances or who is just not aware that 10% down strategies are again very viable for qualified buyers. Instead of defending a position of “Well, your buyer only has 10% down…,” we look at it as, “Our buyer is strong enough to qualify for this type of program!” And then, we back it up with a lot of experience. Winning any offer is a blend of luck and skill, but when we support one of our 10% down client offers, we do not do so from a position of weakness.

It’s a quote often attributed to Mark Twain that goes, “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”  And while we’re on the topic of “ain’ts,” it is a shame that more buyers are not aware they can win with 10% down. We do it all the time and we’re here to help them find the thrill of home ownership with less than a 20% down payment.

I’m walkin’, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959 Fax: 415-366-1590
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283