American banks are very reluctant to lend to non-residents. They issue loans at high interest rates. The minimum floating rate for non-residents will be 8% per annum, on average it will be about 10%, since lending to some non-residents is associated with increased risk for US banks.
To get a commercial loan, you need to pick up a large number of documents, as well as have money for a down payment. Mortgage Bankers Association recommends a potential borrower to collect an amount of 10% to 25% of the value of the purchased property, ID, SSN.
The basic package of documents includes:
- one or two letters of recommendation from a bank, foreign or American, confirming at least two years of history of cooperation with the client;
- credit history issued by a credit bureau – American or country of residence;
- a document confirming the availability of the required amount in the account in order to make a transaction within 3-6 months from the date of agreement conclusion;
- a certificate from the working place about a certain permanent income or financial statements in case the borrower has his own business;
- documents required to conclude a transaction (agreement, transaction confirmation, etc.).
Keep in mind that banks approach each potential client individually, so everyone will have to form the necessary package of documents depending on the circumstances.
US redemption rates are calculated according to two main models – either fixed rate or floating. Redemption terms are generally between 15 and 30 years. Floating rate mortgages are a common practice in the United States because they benefit banks. Credit organizations themselves determine and change the rates, linking them to the quotes of the US Treasury bonds, the LIBOR rate, etc. There are quite a few models for calculating floating rates, but the most widespread is the so-called hybrid, when a certain number of years (usually from one to 10 years) the borrower pays the minimum fixed rate, and then during the remaining repayment period (on average from 15 to 30 years), the rate changes at regular intervals. So, for example, the 5/1 formula stands for 5 years of payments at a fixed rate, and then it changes once a year.