Loans for Foreign Nationals in Florida: Important provisions regarding "equity"

In general you should expect an equity requirement of 30% when financing in Florida plus capitaln acquisition costs, reserves and contingencies. The exact amount this comes out to in your specificn case is a moving target and we will be happy to determine this for you in advance, so that you can run through different scenarios for your US financing and precisely plan for your capitalrequirements.

It is definitely worthwhile to familiarize yourself with the possible interest rate charges, reserves andpossible contingencies ahead of time in order to dispose in an optimal way and in order to document everything. 

US banks want to know where the equity is coming from i.e. where it has been for the past 60 days. Evidence of the equity can be brief but can also turn out to be extensive - depending on your preparation before the credit request:

Your equity is located in one/several accounts. Here the banks want to see bank statements of the past 60 days.

TIP: If it is possible in the timeframe, transfer your equity into one account which does not have many transaction if possible. This makes the documentation a lot more manageable.

When self-employed: You want to remove the equity from the firm. Very often this is the case. Here your tax consultant will confirm in a three-line paragraph (you will receive the sample from us) that the money withdrawal will not negatively impact the business.

TIP: It is the easiest to take the money out of the firm account as early as possible and to "park it" in a (preferably low-growth) private account. Otherwise you will need to present the bank statements for your business account.

Your equity is tied to a house or other objects of value which are intended to be sold for the acquisition of the Florida real estate. In most cases the proof of sale (i.e. contract) and the credit in the account immediately following the sale are sufficiently informative for this.

TIP: Please make sure that the asset sold was listed under your name and that the sale proceeds were deposited into your account and not into the account of relatives etc.

Your equity only represents a certain amount and you should have the rest financed in your home country.

TIP: Let us calculate your so called "Ratios" for you ahead of time. This is the relationship between monthly gross income and liabilities - in your home country and in the USA added together. In general one could say that the costs (rent and/or potential credit) should total no more than 35% (or sometimes up to 42% or 45%) of the demonstrable gross income. Both your future mortgage in Florida as well as existing loans in your home country will be taken into consideration here.

Your equity is derived from the liquidation of deposits, insurance, saving plans etc. Here the existing contract as well as the resolution and the subsequent account balance will be required as evidence.

TIP: Again, please make sure that the contracts are also listed in your name.

You have sufficient income; however you do not have adequate savings and want to raise them within the family or within your circle of friends.

TIP: Some US banks do accept cash gifts within the family. However, it could be possible that the second person has to be involved as a second buyer and borrower.

The money is cash in a safe.

TIP: The money should be deposited or remitted into an account as soon as possible so that the 60-day regulation (see above) can be applied. This should be in the private account of the borrower.

In addition to the scenarios presented above there are a number of additional possibilities, also those regarding evidence. Please contact us regarding this as soon as possible. 

This is important: Please inform yourself about the necessary documents as soon as possible. Once you have found your dream house and the contract is signed the clock starts ticking and time until the closing becomes short. The documentation required varies from one case to the next and can be very manageable, if properly prepared.