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Novus America
International Real Estate
Have you wanted to own a vacation or second home in Mexico but thought it was out of your reach? For the past several years, foreigners have been able to purchase properties in Mexico using a traditional mortgage! Cross Border Investment provides premium financial services in Mexico – including mortgage brokering and closing coordination.
At CBI, we work with you to select the top loan for your needs and we shop for the best deals amongst our lenders. CBI offers ALL loans available – we are your link to the lowest interest rates and fees, as well as the smoothest closing. Contact us today, and let CBI make your dreams a reality!
The process of purchasing real estate in Mexico mirrors that of your home country. However, similar to how there are differences from state to state or province to province, there are some important distinctions in the Mexican process as well. Please read through this guide and review the mortgage process in Mexico chart to help get a more clearer understanding.
The job of a mortgage broker in the US and Canada is usually to match the borrower with the best mortgage product for which he can qualify. The broker analyzes your credit history, income and asset verification, as well as other factors required for qualification. The broker gathers all the documents required, completes the loan application and submits to the lender for approval. In the US and Canada, when the borrower receives his approval, generally the closing agent (lawyer) assumes responsibility and processes the permits, certificates and deed. In Mexico, the Notario acts as the closing agent, however, a good mortgage broker is involved in coordinating the closing. When a foreigner purchases a property in Mexico, there are several entities involved:
Foreigners purchasing property in Mexico with a mortgage represent a small percentage of total national real estate transactions. As such, your mortgage broker should have the necessary experience to share his specialized expertise, and should be involved with you from the very first email or telephone call up until the deed is signed. Your mortgage broker acts as the intermediary between all entities involved, and assists to assure that all permits, certificates and appraisals are ordered correctly and in a timely fashion. Cross Border Investment maintains the lines of communication open, enabling a more timely and secure transaction. To find out any aspect of your purchase and loan – from the status of your approval, to permits, appraisals, and the deed – you just need to speak with your loan officer at CBI. For tips on how to choose a mortgage broker, please click here back to top
Article 24, Fraction I of the Political Constitution of the United States of Mexico (Artículo 27, fracción I de la Constitución Política de los Estados Unidos Mexicanos) dictates that foreigners cannot directly own land or water within 50 km (31 miles) of the shore or 100 km (62 miles) of Mexico’s borders*1. Mexico’s constitution was implemented in 1917, so the restricted zone was employed to protect against military attacks. As you can imagine, it was considerably easier to come up with an alternative to the constitution, as opposed to an amendment. As a result, after 1970, the Bank Trust (Fideicomiso) system was implemented. A permit from the Secretary of Exterior Relations (SRE for its acronym in Spanish) is issued which allows the establishment of the individual bank trust. The trust grants to the beneficiary (the buyer) to use, modify, borrow against, rent or sell the property at his/ her discretion. This is not a lease and your property is not considered an asset of the trustee bank*2. The trust also provides estate planning. The buyer is the beneficiary to the trust, and the substitute beneficiary is the person who inherits the property in case of the beneficiary’s death. The substitute beneficiary can be modified, and the trust would supersede a will in your home country. *1http://www.sre.gob.mx/index.php/permiso-para-constituir-fideicomiso-en-zona-restringida *2http://html.rincondelvago.com/contrato-de-fideicomiso.html back to top
When we hear the word Notario, we automatically think of a Notary Public. However, a Notario in Mexico is considered much more prestigious. In the case of your property purchase, the Notario acts similar to a closing lawyer in your home country – CBI works with the Notario to order the permits and certificates, to write the deed, and the signing of the deed takes place in the Notario’s office (if you are unable to attend, we can set-up a Power of Attorney for you). A Notario is a law professional who brings justice security to acts and facts before the law. The requirements to be a Notario vary from state to state, but the general terms require that he have a law degree, that he has worked in a Notario’s office, that he has a good professional and personal reputation, and that he passes a series of exams.*3 The Notario used for your real estate transaction will be one of the most reputable in the region. Aside from the vigorous process it takes to become a Notario, the Notario must be approved by the lender – leaving us with the best of the best. *3http://www.notariadomexicano.org.mx/ayuda.html back to top
An Escrow account is used in the real estate transaction as a means to protect the buyer, seller and lending institution. The Escrow account may be used to pay the deposit/ down payment, the closing costs, commissions, and will be used to fund and disburse the loan. The Escrow account is based on a mutually agreed upon contract – which is signed by the buyer and the seller. All funds that are disbursed from the Escrow account also need to be approved by both the buyer and the seller. Since the Escrow agent is a neutral third party, working in the interests of the buyer and the seller, there is added protection provided to the real estate transaction. back to top
Title insurance provides for protection from financial loss on a specific piece of property due to a title defect, lien or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. *4 Title insurance is common and sometimes even required in parts of the US and Canada. In Mexico, title insurance is not required by any of our lenders. This is primarily because the Notario has to provide a certificate of no liens for the property you are purchasing, and the lenders are comfortable with this protecting your investment/ their collateral. The certificate of no liens (certificado de libetad de gravámens) in Jalisco is described as: “the legal document that makes record the situation – free of liens or with lien – in which the determined property or title is found, according to the registry and documents existing in the archives”*5 Title insurance is generally provided via a US firm. Whether you opt for title insurance or not is a decision you will need to make early-on in the process. Please contact your Cross Border Investment loan officer for more details. *4http://en.wikipedia.org/wiki/Title_insurance_in_the_United_States *5http://tramites.jalisco.gob.mx/infoTramite_hac.php?ac=2&id2=628 back to top
When your loan officer at Cross Border Investment discusses closing costs, we refer to all the costs required to complete the corresponding real estate transaction – these include financing fees, Notario fees, and taxes. Closing costs in Mexico can sometimes come as a surprise to some buyers. The closing costs are generally paid by the buyer, and the seller is usually responsible for the realtor’s commissions and capital gains, as applicable. Closing costs should be considered, as you will need to have the down payment, closing costs and perhaps mortgage payment reserves available. The basic theory to Mexican closing costs is that the fees to purchase a property can be seen as comparatively expensive, but the costs of maintaining the property are significantly low. It is generally said that for every $100,000 USD of property value, you pay $100 USD in annual property tax. So, for a property worth $400,000 USD, you will pay approximately $400 USD per year in property tax. Surely, you cannot expect that in the US or Canada! It is rather difficult to discuss specific numbers without the purchase price and loan amount. Some closing costs are a percentage based on the value of the property, others a percentage based on the loan amount, and others are fixed. Closing costs as a total percentage work on a sliding scale – the higher your purchase price and loan amount, the lower the closing costs represent as a percentage. Generally, when purchasing with a mortgage you can expect the closing costs to represent 6-12% of your purchase price. Please contact your Cross Border Investment loan officer for a customized estimate. It is nearly impossible for closing costs to be 100% accurate – this is because of two important variables, the first one being conversion rates. Some of the closing costs are charged in pesos, some in USD, but generally, all are paid are in USD. It is highly unlikely for the conversion rate the day the estimate is sent to be the same rate as the day the costs are paid. The second important variable is that some of the closing costs are based on the fiscal value of the property, and the fiscal appraisal is performed as part of the closing process. For the purposes of the estimate, we base the costs on the purchase price. Closing costs may vary from lender to lender and state to state, but generally include the following:
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International Real Estate Rocky Point Mexico Mexico Cell: 044-638-110-0471 From US:623-335-5856 Email Mike
