By: Doug Jones
I trust you all had a happy Mexico Constitution Day yesterday! Mortgages In Mexico has been very busy. As anticipated, this is definitely the year of the Canadian!! We have had approximately 50% of our new loans since the first of the year with Canadians. We now have two (2) excellent sources of Canadian money available. These programs vary in length from 20 to 25 years. Interest rates vary from 7.5% to 9%, and the down payment requirement is from 25-35% down. We also have money for those difficult to qualify “self-employed” Canadian and US buyers. We are able to qualify these buyers with 6 months of bank statements instead of using the (usually) limited income shown on their tax returns. We are still going strong with US buyers as well.
The question on everyone’s minds is will interest rates in Mexico come down as a result of the recent Federal Reserve drops in the US? The answer is no. The Federal Reserve changes are designed to affect short-term rates, and in fact the LIBOR index (used to determine what a new adjustable rate payment will be) has come down over 1%. This is good news for people who have adjustable rate loans. Unless and until short-term interest rates remain low for a long period of time, there will not be a drop in interest rates for Mexico loans. The risk factor for Mexico loans has already been calculated into our existing rates, and in spite of the ups and downs in the US markets over the last year and a half, we haven’t seen any changes in our Mexico rates – it is somewhat, but not totally insulated from the US markets.
Mortgages In Mexico is anticipating the return of GMAC back into the market sometime this month. They have been purchased by a Wall Street brokerage company who has been eager to get into the Mexico mortgage market. We anticipate being able to loan in excess of $1 million loan amounts, and a stated income program. This fits very well with the financially sophisticated client who prefers not to divulge every detail of his/her financial life. GMAC will be known under a different name when they come back into the market.
We are also anticipating new and improved guidelines from GE. GE recently lowered their maximum loan amount to $1 million. We believe we will once again be able to loan in excess of $1 million with GE as well. We will be getting specific guidelines probably by the end of February and will keep you posted on the changes. We know there are new procedures which will prevent delays that were caused by “multi-level” approval processes. This meant we had to get a loan approved by several different levels of management, which added time and requirements. Our primary underwriter will have authority to approve loans up to $1 million. This will be a HUGE time savings. Previously the underwriter could only approve loans up to $300,000 before it had to get further approvals from upper management.
We continue to see more and more, larger loans. Since the first of the year, we’ve taken several loans in the $600-800,000 range, one for $900,000 and 2 loans of $1 million or more. In addition to GE and GMAC coming back into the market with loans of more than $1 Million, we currently have a lender doing these larger loans. These loans can also be made to previous customers of yours who want to take some cash equity out of their homes in Mexico that you sold them. We call this a “cash-out” refinance. Existing homeowners/investors see what is going on with increasing prices in Mexico, and they want to invest in other properties in Mexico. The US market is a good 2 years away from starting to go back up, and these savvy investors want to park their money in good investments. Mexico real estate is an excellent choice. Now may not be a good time for investors to pull equity out of their real estate in the US because the values of their homes (and available equity) continue to go down. It may be easier to refinance a Mexico home right now than it is in the US!
Give us a call or send us an email. We’ll be happy to discuss any of our loan options with you. We are working with ALL the available lending sources in Mexico and have excellent relationships with all of them. Although it may be possible to sometimes go to the lender directly rather than using a broker like Mortgages In Mexico, it is still beneficial to go through us rather than direct. Why? Because since we have the documents with our in-house processing staff, we can send the documents to different lending sources without having to start all over again. When you go directly to a lender, if they turn down or modify the loan, your buyer will have to once again provide the documents for the new lender because the previous lender doesn’t return the documents to be sent elsewhere. In fact, we have several of our lenders who are recommending Mortgages In Mexico as the “go-to” broker because of our expertise and follow up on our loans. The lenders benefit by this because they need fewer employees to process the loan (many are already getting slower in their processing because of increasing loan production). These lenders want to get the loans, and they prefer receiving these loans directly from brokers rather than doing them directly themselves. Have a fantastic February!