US real estate holds a massive appeal for foreigners who wish to invest their hard-earned money into a competitive real estate market in a foreign country. According to a mortgage company Dallas, while purchasing a home is relatively straightforward for the residents, it can be intimidating for those unaware of how real estate in the US works.
If you, too, are looking to make the US your home in the coming years, this guide will include everything from start to finish to get you started.
Can Non-Residents Buy Property in the US?
The short answer to this is a resounding ‘yes.’
Foreigners can purchase a property (residential/commercial) in the US with some restrictions and additional documentation requirements.
The only condition? They need to familiarize themselves with the standards, tax implications, and financing options readily available to them.
Documents Foreigners Need to Purchase a Property in the US
Because buying a property as a non-resident is a tricky affair in the US, you may be asked to provide a series of official documents to get things going. Some of these documents include the following:
- A US visa
- A Valid passport
- Pay stubs
- Credit report
- Bank statements
- Tax returns
- Others (depending upon the lender you choose)
Once you have all the required documents handy, you can officially start following the step-by-step process of buying a property in the US. Here’s a list of steps you need to follow in order to buy a house in US:
How to Buy a House in the US as a Foreign National – A Step-by-Step Guide
Step # 1 – Plan your purchase
Like anything else, buying a house in a foreign country also begins with proper planning and preparation. Here we’re talking about getting into every minuscule detail, such as the cost, location, city, etc.
It is also essential to look for schooling options (if you have kids), community activities, entertainment options, commutes, nearby facilities, safety, and more.
Step # 2 – Find a real estate agent and begin your house hunt
The next step is to find a real estate agent who’s knowledgeable about a non-resident home buying process, transactions, and laws. This is particularly unavoidable if you’re a first-time
buyer with little to zero knowledge about the entire home-buying process.
Ideally, the real estate agent should possess an expert qualification, such as CIPS. It is also crucial to hire an agent who can speak different languages and is familiar with local state property laws while being knowledgeable about your individual needs and preferences.
Step # 3 – Rule out your budget & understand your tax situation
You must decide on the budget before you take a step forward to find your dream house in Dallas. While you can acquire a mortgage by putting 5% to 10% down on your asset’s value, most lenders prefer a downpayment of at least 20%. Putting down more money at the start can also benefit you in the way that you won’t have to pay a lot monthly. So having a budget that covers a 20% downpayment is a win-win for both the borrower and the lender.
The US is believed to be the land of opportunities. Unlike other countries that impose additional tax implications for foreign investors, the US government ensures there are no extra charges for non-resident home investors.
Step # 4 – Make an offer on your desired property
At this point, you’re all set to find your desired property and make an offer. Prepare a checklist of everything you’ll need to live comfortably in your new home.
The offer letter is a legal document that includes all the abiding real estate terms and conditions of the state where you plan to buy a new home. As a general rule, you need to have these things in your offer letter:
- The amount you’re going to put down
- The total amount you’re going to pay for your new house
- Additional negotiations and documents
There might be a few additional things as well. You may ask your real estate agent to help you draft an all-inclusive offer letter that you can send to the seller.
Step # 5 – Conduct a home inspection
You’re now at the point where you can have an appraisal done for your new property. A home appraisal is a process that a mortgage lender uses to determine the actual worth of your home. A thorough home inspection helps you assess the actual condition of a property and check whether the facilities provided with the property are up to date. You may also want to check for proper electricity, plumbing, garage/parking slot, etc.
Step # 6 – Seal the Deal
Congratulations! You have finally made it to the final step of your home-buying journey.
It is time to seal the deal by signing the contract, which is basically a legal document that includes all the terms and conditions your agent negotiated for you. You will also need to deposit your Earnest Money deposit (usually 5%-10% of the total sales price) into an Escrow account.
Furthermore, there should be a clause in the contract of sale highlighting that you will not proceed with the process if your immigration status changes.
After closing a deal, the next step will be to complete a title report. A title report is another critical official document that protects the buyer. It includes the previous homeowners’ names and current liens against the property if any.
Tips for Foreign Newcomers in the US
- As a foreign national, you must walk through the property in person to know more about the location, neighborhood, available amenities, and more.
- If you live outside the US, when making payments, make sure you send the cash through a certified foreign exchange professional.
- Always have a clear budget in mind. This will help you find suitable financing sources for your home purchase.
- Remember, not all lenders cater to the needs of foreign nationals. You will have to look for the right lender to help you get through the home-buying process in the US.
- Last but not least, keep the exchange rate in mind. Also, ensure you’re fully aware of tax implications before you move forward with the process.