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Costa Rican Mortgage Questions...

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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)

 

 

this is what they sent me today

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And, your point in pasting from somebody else's web site is what, exactly? Haven't you ever been told to not believe everything you read? Just because something is posted on a website doesn't make it so!

 

I have - as I have said over and over - already talked to these people. There is no money to loan at present. Yes, they will gladly take your application, as they took mine. And, yes, I have good credit. But, it did me no good. Have you, personally, applied for a loan? Do you intend to do so?

 

For that matter, have you looked very, very closely at the information you have so thoughtfully provided to us? Real close.....even if they had the money to loan, do you seriously believe that their terms are fair, and of benefit to the average person? Looks to me like (as I have said over and over) these terms are entirely one-sided (against the borrower), and they certainly are not acceptable to this potential borrower.

Edited by jdocop

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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)

 

 

this is what they sent me today

What ever happened to "contract for deed"?

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that is info that was sent to me not someting i "took" off their website

 

and u r missing part one

 

 

 

this is HSBC's policy for lending money to non costa rican residents who seek financing for real property in costa rica

 

i don't know why anyone would question the legitamacy of this info.

i contacted them about financing for non-residents and they sent me this

HSBC is a widely recognised international bank,not some fly by night unknown entity

 

then again i don't know why some ppl seem to have an overwhelming need to pick apart everything regardless of of how valid the info is

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i don't know what your unique situation is and no i have not applied for a loan w/anyone yet in c r and do intend to investgate other options but i do feel that the terms for non-residents borrowing from banks in cr will prolly be different than what ppl in the us are used too.i do find it odd that a bank as large as this one has as u say "no money to lend"

 

that is what banks are in the business of doing.

 

bear in mind that do to the collapse of the residential housing market in the us costa rican banks are also proceeding w/more caution to avoid a similar situation in their own country

 

if u feel their terms are unreasonable than don't do buisness w/them.

 

i do feel that nothing is etched in concrete

 

many things are negotiable

 

i do see the logic in what the borrowing terms are .basically they do not want to be stuck w/the property in the event of a default

 

i am guessing that these are more guidelines and depending on the situation may not be insurmountable.

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NJ, several points come to mind here: (I may be wrong here, but) I suspect that you are much younger than I (your spelling/grammar looks suspiciously like 'texting' to me, and that is not something most of us Old Phartes do), so I do not expect you do agree with much that I say. However, for your information, HSBC happens to be very famous for all kinds of past nefarious activities, and shoddy loan practices, both in the U. S. and elsewhere. Some of us may know them better through some of their affiliates, such as Household Finance, or Beneficial Finance. They have paid out lots of money over the years, going back to the 80's and 90's, in class action law suits against them, and in Federal fines, at least in the U. S.

 

You said: "then again i don't know why some ppl seem to have an overwhelming need to pick apart everything regardless of of how valid the info is" Let me remind you that I am only trying to correct your misapprehension of certain information, and my attempt is based on fact, not conjecture, rumor, or chismes.

 

You seem to be aware that there is a serious financial crisis going on right now. For your information, this started several months ago, and even banks in the U. S. do not have money to lend. Perhaps I could have stated this differently, by saying that banks, which you believe have money to loan, are not presently willing to risk any of their money in loans of any kind. How much money do you suppose all of those failing banks have available right now?

 

Bottom line is that, even though they all have policies, those policies are old, and this crisis is still new, so they haven't had time to correct their policies. They have, however, had time to learn how to say "No."

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Here in a excert from todays Tico Times

"Bad Economic Weather Moving In

Experts predict a recession here; signs of slowing already evident

 

By Elizabeth Goodwin

Tico Times Staff | editorial@ticotimes.net

 

The financial crisis sweeping the globe is creeping up on Costa Rica, with a dip in foreign investment leading a pack of problems prompting some of the country's economists to predict a recession.

 

While Costa Rica's banking system is relatively isolated from the ailing banks in the United States and Europe, the general lack of liquidity in the global markets means the country is seeing less direct foreign investment.

 

Costa Rica's banks, reluctant to loan, are holding on to their dollars and granting less credit, at higher rates. This means business customers will have trouble restocking their stores, and other clients will struggle in repaying their loans, leading to a slowdown in commerce.

 

“There is going to be less money (for consumers) to spend and lower production and lower employment,” said Luis Mesalles, a former board member of the Central Bank and general manager of La Yema Dorada, a food manufacturer. “This is going to come, and people need to be prepared.”

Read the rest at www.ticotimes.net/topstory.htm on the 23rd Oct. '08

Edited by costaricafinca

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i see u attack every new poster

 

i think the term is cyber bully and i don't know why no one has stood up to u b4

 

u obviously have too much time on your hands and a chip on your shoulder

 

u do not impress me as any kind of financial expert and these are obviously ur opinions

 

u have provided nothing factual to substaniate any of it but u insist on being right

 

ppl do not like having others opinions shoved down their throats

 

the purpose of this board is not to attack other members,but to try and provide useful info that may be helpful to others

 

i do not see ur motive as being helpful,quite the contrary,if what u have to offer is not constructive then i suggest that u keep it to urself

 

if u like to argue so much then i suggest u find a different forum than this one.

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i see u attack every new poster

 

i think the term is cyber bully and i don't know why no one has stood up to u b4

 

u obviously have too much time on your hands and a chip on your shoulder

 

u do not impress me as any kind of financial expert and these are obviously ur opinions

 

u have provided nothing factual to substaniate any of it but u insist on being right

 

ppl do not like having others opinions shoved down their throats

 

the purpose of this board is not to attack other members,but to try and provide useful info that may be helpful to others

 

i do not see ur motive as being helpful,quite the contrary,if what u have to offer is not constructive then i suggest that u keep it to urself

 

if u like to argue so much then i suggest u find a different forum than this one.

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So When Will Banks Give Loans?

By JOE NOCERA

 

The banking industry’s dirty little secret is that it has no intention of using the bailout money to make new loans.

 

http://www.nytimes.com/2008/10/25/business...amp;oref=slogin

 

“Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”

 

It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question. It came toward the end of an employee-only conference call that had been largely devoted to meshing certain divisions of JPMorgan with its new acquisition, Washington Mutual.

 

Which, of course, it also got thanks to the federal government. Christmas came early at JPMorgan Chase.

 

The JPMorgan executive who was moderating the employee conference call didn’t hesitate to answer a question that was pretty politically sensitive given the events of the previous few weeks.

 

Given the way, that is, that Treasury Secretary Henry M. Paulson Jr. had decided to use the first installment of the $700 billion bailout money to recapitalize banks instead of buying up their toxic securities, which he had then sold to Congress and the American people as the best and fastest way to get the banks to start making loans again, and help prevent this recession from getting much, much worse.

 

In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.

 

(He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)

 

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

 

Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy.

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And, that, my friends, is one more reason that this "bail-out" is such a really lousy deal for the American Sucker, er, uh, taxpayer!

Well JDO,

 

I wrote to my elected officials (as I am sure did many others) and instructed them to vote against the bail-out, for all the good THAT did...

 

...Or our instructions were ignored... (Which was it, I wonder.)

 

¡Puros Políticos!

 

Paul M.

==

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