Know your customer form
Note: If there is any other documentation that would be helpful in speeding the loan process along, please supply that information. Such information may include documentation on a Costa Rica Corporation you may have, survey plans, folio real numbers, construction plans, documented proof of alternative sources of income including award letters for pension and/or Social Security, rental income/agreements, etc
Open a banking account – done by the bank
Bank reference letter – done by us or the bank, and only in certain case
CPA validation letter for self employed borrowers
After the loan process has begun, here are some of the other documents that are required in order to finish your loan application of which we will coordinate:
12. Appraisal: We arrange the appraisal on behalf of the client. 13. Title Work: We arrange this for our clients. Client has to provide 20% as a down payment towards the full cost of the title guarantee until the loan closes. Title policies generally run between 0.7% and 1.0% of the value of the loan. For example, if the policy is 1% and the financing is for 300,000, the customer will have to provide $600 to begin the title guaranty process.
14. Life Insurance – HSBC requires that a life insurance policy equal to the value of the loan (in some cases lower) be present before the loan can close. So if you are closing a loan for 100,000, you will need a life insurance policy for 100,000. If you currently have a policy from your country of origin, that policy can be used if equal to or over the amount of requested financing. The lender would have to made beneficiary through a collateral assignment of said amount, which would be verified before funding. A formal letter must be sent to the bank from the insurance provider stating that the bank is the beneficiary of such loan amount. In the case that you do not have a life insurance policy, you must request a policy from a provider in your home country. Sometimes this involves having a medical appointment, and the policy must be underwritten as well. If this is required, we suggest it be expedited immediately as delaying this step in the process can delay the loan from closing.
15. Home or Hazard Insurance – Home or Hazard insurance must be placed on the home as a requirement. The price of a Hazard policy is around 0.0026% of the property value a year. For example, if your house is worth 100,000, the policy cost per year would be around $260.
16. Certification of Municipal taxes and land (up to date). This is normally provided by the developer or homeowner. Property taxes run about 0.0025% of the value of the property. . For example, if your house is worth 100,000, the property tax per year would be around $250.
17. Copy of Cadastral Plan (survey plan) – We can arrange for this to be taken care of, which is provided by developer.
18. Closing – Those applying for mortgage financing must be present to sign loan documents once the mortgage has been completed approved, closed and formalized.
General Closing Costs:
- HSBC Origination Fee – 2.5%
- Legal fees – 1.257% of loan amount
- Title Guaranty - 0.70-1.0% of sale price
- Appraisal - $400-800 (estimate)
- Trust Fund Management - $250-500
Some Other General Qualifications:
Credit Scores: 650 and above
LTV (Loan to Value-What You Can Borrow Up To) Levels: Up to 83%
DTI Ratio: 25% for housing alone (up to 30% in some cases), up to 40-45% total (mortgage and other debts). The total debt ratio can go up to 50% NET with a monthly income of 10,000 or more. With most of the local banks the DTI Ratio is calculated off of a Net income figure. So how do you calculate DTI Ratios? It is very simple. Let’s say that someone makes $10,000/month gross and after taxes $8,000 net. We first need to add up the monthly debts that are listed on the credit report only (mortgages, car loans and credit cards). So let’s also say that they have a car payment for $400/month and a mortgage in USA for $1000/month. $1400 all together. That would mean they currently have a DTI Ratio of 17.5% net (1400 divided by 8000). If we add a mortgage payment here in Costa Rica to this debt load, the DTI Ratio would be calculated as follows. They want to buy a home and the lending amount if 100,000. At 8.5%, for 25 years, the payment would be around $850/month including taxes and insurance. $850 + $1400 = $2250. Divide $2250 by 8000 and your total DTI Ratio would be 28.125%. This person would qualify!!!
Credit Record Fee: collected by HSBC for $50
Defining the Loan Process
As a part of the buying process, if you wish to receive financing, we would briefly like to explain these terms so that we are all on the same page and can move forward together.
1. Pre-Qualification – To become pre-qualified, one would fill out the loan application document as complete as possible. The loan application will be reviewed by HSBC, along with the credit report. In order for HSBC to pull credit, we must have our application fee of $50 USD. With respect to Canadian customers only, credit reports are more expensive and the application fee for one borrower is $150 USD and for 2 borrowers $200 USD. In addition, obtaining a Canadian credit report can take up to 3 business days. The fee can be paid directly in the Bank’s account at Citibank :
We can then make a decision in a short amount of time whether or not the client will most likely qualify for a loan in the near future once we have the credit report. Pre-qualification does not include sending us all your documentation to verify numbers, income and other pertinent information. Pre-qualification also does not mean that you have been approval by the bank. (Time Frame – normally same day upon receipt of application fee and pulling of credit report)
Pre-Approval – To become pre-approved the process is taken a step further. During this process HSBC asks for all the required documentation from the client to be able to make a very accurate assessment as to whether or not one will be able to receive financing from the bank. Once all the client’s documentation is obtained a Bank’s underwriter will analyze the information and can with certainty, provide the customer with a true pre-approval that says that we are confident the client will receive bank financing. In the cases where a customer wants to be absolutely sure, we will give the customer a conditional approval. Pre-approval also does not mean that you are approved with the bank, but is a good faith statement of what would most likely happen. (Time Frame – After complete receipt of clients documentation, 2 days maximum)
Conditional Underwriting Approval – In this step, a full and complete loan file is sent to the bank for underwriting analysis. After analyzing the file, we will either deny credit or will approve the loan with conditions to be met in order for the loan to close. Most conditions are things such as getting an appraisal for the purchase amount, verification of a life insurance policy, securing a title guarantee and things of that nature. The bank may also require addition paperwork to fully approve the loan to close that may have to be provided by the client. (Time Frame – 3 business days)
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