Many of my relocation clients come to Silicon Valley from outside of the U.S. For them, financing a home purchase may be a big concern. There are many questions about down payment amounts required, moving money to the United States from abroad, purchasing without a regular credit history here, and many more.
I thought it would be helpful to get some lending and finance information to my global readers and have interviewed Allen Liang, a private mortgage banker with Wells Fargo Home Mortgage, a very experienced and knowledgeable lender who has worked extensively with global clients and can speak to these issues authoritatively. Below please find my questions and his answers.
How difficult is it for international home buyers to get financing in today’s market?
Lending to international home buyers is not as hard as many people think. Most international home buyers are well qualified buyers. Due to a lack of credit history and income verification system different than in the U.S., the lender normally does require more documents. With a thorough interview and well prepared paperwork, we can help international buyers obtain the mortgage in the U.S. However, the processing of international home buyers’ loans might take a slightly longer time to process. I highly suggest starting the paper work as early as possible, so we can get them pre-approved by the underwriter.
What things should home buyers do to make the process of obtaining a loan smoother? How much time in advance should they begin to get their paperwork or finances in order?
To make the loan smoother, borrowers need to prepare all the documents as much as possible. Sometimes, we have to be more creative since something required does not exist in other parts of world. For example, in many other countries, there is no w2 available, therefore, we can check for each country for what alternate documents can be provided. In some cases, we need to have three months’ time to plan ahead for the paper work. For example, the Chinese government has a regulation that only allows one person to wire $50,000 to an overseas account. Then the borrower might have to have their friends wire the money for them. However, in the US, this is unacceptable source of down payment for some loan products. So the proper preparation is critical to the loan processing. I recommend that buyers talk to their loan agent first before looking for house or transferring money to the US.
What is the procedure for moving assets (cash) from other countries to the U.S.? Is there a limit as to how much can be transferred at once for the down payment? (Any advice on the best way to do this?)
The U.S. does not have any restrictions on how much money transfer is possible. However, other countries might have restrictions on wiring the money overseas. For example, China has restriction on the maximum amount that a Chinese citizen can transfer ($50K) to the other countries. As of result of this, we see multiple wirings to the same person for the same transaction. Lenders will treat those funds as “gift” money. Each lender has their own requirements on how to handle the gift. The best suggestion is to talk to your loan agent before depositing or wiring money to your account. Depositing cash to your account is not an acceptable source for your down payment. (The reason: in the U.S., the lender normally verifies two months of bank statements. The lender is looking for monthly cumulative deposits or one large deposit which are more than 25% of your gross income. If you do have a large deposit, as the borrower, you will need to explain and documents the source of that deposit. Cash deposit was not acceptable source. Gift from relatives is acceptable source, but you will need a gift letter from the donor.) I suggest wiring the money as soon as possible to personal account, not to business account.
What down payment is needed if the international buyer is new to the U.S. or just started working here? Is it hard to get a loan if there isn’t a track record of a couple of years?
Even with people just arrive in the US, we might be able to get the mortgage loan with 20% down payment. We will get the international credit report to substitute the US credit history. It generally requires a little more paper work for it. But with proper planning, we can still do it.
What general advice do you have for newcomers to the U.S. generally, and perhaps for people relocating from China specifically, regarding home buying and financing?
New immigrants need to understand the rules and general guidelines in the U.S. which might be totally different than their home land. I suggest the new immigrants talk to a loan agent first. An experienced loan agent will be able to guide the new immigrant to prepare for the purchase of property in the U.S. in advance. In some cases, new immigrants need to prepare the document for three month before they can make an offer.
Final note from Mary:
As with all of my blogs, this interview was done because I know, like and trust Allen Liang. There was no payment of any kind, this is not an advertisement – just an endorsement from me because I have found him to be extremely knowledgeable, ethical and responsive, and I think he would do a great job for anyone – especially my international home buyers.