We recently submitted a series of questions to Elaine Duke of Your Mexico Mortgage. Ms. Duke is an expert in the Mexican mortgage field especially for Canadians and Americans looking for a second home or retirement possibilities. Please feel free to contact her with any questions via her website and please tell her were sent you.
Mexico Real Estate Blog (MREB) - What is the latest on the real estate market in Mexico? Is it recovering?
ED -The last six months indicate that a recovery is certainly underway in Mexico! We have been busier in the last 6 months than we were all of last year, and in speaking to clients and developers, it appears that the general public recognizes that the negative “Mexico news” is primarily along the border not in the resort areas. Those of us that live there and visit there realise that the perceived dangers in Mexico are also reality in the USA and Canada. It is my belief that the Americans and Canadians are realizing the affordability, natural beauty of Mexico, the warmth of the Mexican people, the culture, and the lifestyle, as well as the constantly improving health care programs and providers make Mexico one of the best choices globally for retirement living and secondary home investments.
MREB - Where are the hot spots which you are securing mortgages in 2010?
ED – We are finding all of Mexico to be busy, our top spots for financing this year have definitely been in Puerta Vallarta, Mazatlan, Puerto Penasco, Cancun, Playa del Carmen, Cabo, and La Paz, however, Ensenada, Mirada and Lake Chapalla also interest the foreign purchaser.
MREB - Tell us about your company “Your Mexico Mortgage”?
ED – Your Mexico Mortgage was founded 4 years ago as an independent mortgage brokerage specializing in mortgages in Mexico, Canada, and the USA. We work in conjunction with Advanced Mortgages in Mexico which is headquartered in Dallas Texas, and all of the loan processing is done through the USA. We have no affiliations with specific lenders, we are able to shop the market for the best rates and terms for the clients in all three countries and are often able to offer financing in Canada and the USA which is much more attractive in terms of rates and fees than a Mexican mortgage, dependant on the individual borrower.
MREB - What type of mortgages are offered for properties in Mexico?
ED – We offer residential mortgages for existing homes and condos, building lots, construction mortgages, and also have access to commercial loans. Bank statement loans are also available for those self employed individuals whose tax returns may not show sufficient income for a traditional mortgage.
MREB - What percentage of cash should be expected to be paid for a property as compared to a loan?
ED – Currently, the banks in Mexico lend up to 75% of purchase price or appraised value, however we are able in some cases to add closing costs of 6% to the mortgage which decreases the amount of required down payment. You can expect a downpayment in the 25% range. In Canada, we are able to provide up to 90% of the value of a clients existing home in Canada, in order to free up cash for the Mexican purchase and similar guidelines are also available in the USA.
MREB - How are the interest rates comparing to rates in the U.S./Canada and also to the last couple years. Are they locked in?
ED – Everyone wants to be Canadian right now!!!! Our rates here in Canada start at 1.80% for a floating rate variable (floats with the canadian prime rate, currently 2.50%), and cap in the 4.39% range for a five year mortgage.( as of June 9, 2010, subject to change at any time).
In the USA you can expect rates in the 5% range, and in Mexico the range is much different the client’s credit score combined with the down payment affects the interest rate they are granted by the bank. We are seeing rates in the range of 6.50% up to 8.5% depending on the term and credit score. The 8.5% range is a locked in mortgage for 30 years, with the lower interest rates being floating rates. Mexico is a little different as on the floating rates you are guaranteed this rate for the term ( 3 or 5 years) and after that period your rate is reset for the remaining loan period. In Mexico the LIBOR (London Index) is used for loan pricing,
MREB - What additional costs can you expect such as points and origination fees?
ED – Depending on the lender, they may or may not charge a 1% origination fee, when we shop and compare lenders this is taken into account versus the different interest rates offered. You can expect origination fees to be in the 3% range. (Do you think you should mention the additional Mexican fees that range 5-6%?)
MREB - What does the buyer need to take care of in Mexico concerning their mortgage?
ED – The most important factor here is to find a reputable company with a good track record in Mexico. Check testimonials and ensure the company knows their business in Mexico as it is a very different process than north of the border. Never pay brokerage fees up front, we get paid when the mortgage is advanced, other than a nominal fee for credit work, you should not be required to pay any funds to the mortgage brokerage company until the mortgage is processed.
Find out if the brokerage company will be with you through the entire process, we take our clients through the entire process, including appraisals, permits, notario process, bank trust, and all of the other processes in Mexico at no additional cost.
Ask for an estimate of costs, we have seen instances where a mortgage brokerage company will quote you a low fee, however there may be hidden additional costs such as underwriting fees, loan processing fees, and numerous other fees that do not form part of the “low fee” offered up front. Any reputable brokerage company will be able to present you with a closing cost estimate which will have all of the fees disclosed on the estimate.
Find out how much you are required to pay to start the process, and also how fees are disbursed for costs such as appraisal, notario fees…etc. We use an escrow account which acts as an independent third party, protecting your funds through disbursements.
MREB – Is title insurance still readily available?
ED – Yes, title insurance is still available in Mexico, and dependant on the property you are purchasing, may or may not be an additional cost that you need to incur. We can help you with any questions you have regarding title insurance and obtain this coverage if required.
MREB - Tell us a little about yourself concerning Mexico?
ED – After travelling to many of the hot spots of the world, I visited Mexico five years ago for a vacation. Of course I immediately feel in love with the country, the people, the culture, and all that Mexico has to offer. I purchased a home in Mazatlan and realized that the process is very different and foreign compared to what were are used to up north and can be a difficult process. I had been a bank manager in Canada for numerous years and decided at that point that there was a need in Mexico for someone with my qualifications to assist others through the purchase and mortgaging process. I continue to travel to Mexico and work out of both Mexico and Vancouver Island.
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