5 tips to buying and owning a property in the US
Find your ideal property
How will you find your ideal property? Here are some of the most popular options:
Online real estate platforms: According to research in 2020, 51% of homebuyers found their homes online. Popular real estate websites including Zillow, Realtor, Redfin and HomeStory are good places to start your search.
Realtors/Brokers: These real estate professionals are local experts with a working knowledge of property insights in the specific geographic location where you plan to buy. They will help you better understand what locations might best suit your needs. In addition, they will listen to your needs and compile a shortlist of properties that match what you’re looking for.
Real estate exhibitions: Visiting exhibitions and trade shows can help you learn more about property markets in specific geographic regions. You will be able to meet a range of agents and developers, as well as conduct virtual tours of potential properties.
Developers: Buying ‘off-plan property’ from a developer can be a good idea if you are looking for a newly built home. This may allow you to build a home to your specifications, but you will not be able to see the property before you purchase it. It’s important to ensure that you are legally protected if the developer fails to fulfil the terms of your contract.
Finance your property
There are three common ways to purchase property in the US:
Cash - If you have the funds available to purchase a US property with cash you can avoid the process of securing financing. Remember, if you decide to pay cash, you'll be tying up substantial funds in an asset, which will reduce your liquidity.
A US mortgage - Another option is to obtain a mortgage from an overseas lender through a foreign bank, a specialist broker, or a US branch of your existing bank in your own country. They will be well-versed in local mortgage markets, laws and regulations including cross border restrictions. These lenders should have access to a variety of mortgages with different terms, rates, and down payment options. You may want to look for a lender that will leverage your international credit report and does not require US credit history to apply for a mortgage.
Cash-out refinance for an all cash purchase: An all-cash purchase can make the US home buying process simpler. Certain lenders offer the option to reimburse yourself by obtaining a mortgage within a specific timeframe to avoid the additional interest charged on a typical refinance transaction.
Put together your home buying team
Once you find a property and the seller accepts your offer you may need to move quickly to assemble your team of experts to guide you through the home buying process.
Your team should include:
A realtor, who will look to protect the you during the home buying process and make recommendations for other professional services which may be needed.
A mortgage consultant, who will help you find the funding or mortgage that best suits your needs. You may find it helpful to work with a mortgage consultant who speaks your native language.
A lawyer or attorney, who will help you overcome the complexities of local planning, zoning and property laws. They will also research material issues that may affect your purchase, such as a boundary or planning disputes.
A tax professional, who will help you comply with local tax legislation, as well as completing your purchase in a tax efficient way. If you plan to rent your property, they will account for rental income when filing taxes.
A property surveyor or home inspector, who will assess the condition of the property you plan to buy, and identify important work that needs to be done.
Understand the costs of buying an overseas property
When setting your overall budget for your US property purchase, there are other costs to take into consideration, other than the purchase price of the property itself. You should account for:
Professional fees, such as your legal costs and the cost of surveying the property.
Property related fees, such as taxes, title insurance and recording fees (the government’s official record of the property’s change of ownership).
Bank charges, including mortgage fees, money transfers and currency exchanges.
If you’re purchasing your first property in the US, it will need to be furnished. Remember to factor in the cost of shipping/removal of your existing furniture and possessions, or buying replacements in the US.
Understand the costs of owning an overseas property
Once you’ve completed the purchase of your property, it’s important to be aware of some ongoing costs of owning a home. These include:
Insurance - You need to maintain property insurance, which covers repairs or rebuilding costs of the property itself. Contents insurance, which covers your personal belongings from damage or loss in the event of fire, theft, or a natural disaster, may be included in your insurance coverage.
Services - Including gas, electricity, water, telephone, high speed internet and cable/streaming services.
Local taxes - You will usually have to pay recurring fees to local authorities for services such as street lighting, refuse collection and local amenities.
Ground rent or HOA fees - If you have purchased a property in a complex, you may have to pay ground rent to the building’s freehold owner, or pay for homeowner association (HOA) fees for upkeep of any shared or common spaces.
Maintenance and repairs - Whether you live in your property or rent it out, regular ongoing maintenance, upkeep and repairs will be needed.
As there are many aspects to consider when purchasing a home in the US, it’s important to be informed and well-prepared. To ensure a smoother process, choose a home buying team and select a lender who specializes in working with international clients. It’s possible that you will be able to purchase the property without even leaving your home country.
HSBC commissioned this article. The views and opinions expressed are those of the author and do not necessarily reflect the views and opinions of HSBC. For a comprehensive review of your personal finances, always consult with a tax or legal advisor. Neither HSBC, nor any of its representatives may give legal or tax advice. Terms and Conditions apply
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