Ok,

I've searched for a few hours tonight and what i've found is that most mortgage questions go unanswered.

My wife is a CR Citizen, and i'm a US Citizen.

My wife and I are self employed and earn a very nice salary in USD.

We want to buy or build in Costa Rica ASAP.

What are we looking at? Who should we talk to?

I'm looking for interest rates, qualification guidelines... I'm assuming my wife being a CR Citizen, can't hurt...

We're presently in CR and can go and sit down if need be.

All help is much appreciated, thanks!

Lots of luck, Jesse. We have learned, as of late September, that there simply are no mortgage loans available in Costa Rica for anyone. The only loans available are for agriculture. A Citizen or permanent resident may be able to get a personal loan, but the Catch-22's that are attached, make it totally unacceptable (you have to have as much money in the bank already as you are asking to borrow; short term loans only; interest rate that can only be called usurious - 16.25%). We already own a building lot in CR, and thought we could use that for collateral, and learned that is also not possible. As for taking out a loan in the states, you already know the economic mess we have here. If you already own a home in the states that has a real equity, you might be able to take out either a home equity line of credit, or an outright home equity loan.

I have asked a few people and will hopefully be able to get you guys some info by tonight.

Mike

Not to be argumentative, but I have a very hard time believe that there are no mortgage options for Costa Rican Citizens making good money... Maybe more interest, maybe less of a term...however, no options? Come on...

Hey, you asked. Maybe you should ask some banks directly your self. You have to remember that the idea of using credit until you are so far deep in debt that you cannot get out is totally American. As has been stated elsewhere on this forum, the attitude in Latin America has always been that if you can afford it you pay cash, otherwise, you learn to live without.

There are some options out there I get offers from Bac and Scotia they also have a government program for buyer (invu). But the bank offers as stated are not called mortgage loans

A roof over your head is pretty much a necessity in my book... Sure you can rent... but many ticos buy, and they buy on a VERY small income. Some pay cash for typical tico houses which can be very cheap...others use different options.

a quick google turns up http://www.costaricamortgage.net/ which states:

Finished Homes and Construction:
Up to 75% Financing

3 YR ARM: 9.00% 25 YR AMORTIZATION

5 YR ARM: 8.03% 20 YR AMORTIZATION

15 YR ARM: 8.78% 20 YR AMORTIZATION

So we know it's possible and that the mortgages exist... What i want is more than just one option and also to talk to some people who have done it. Keep it coming people, i've already seen a few new options just from this thread.

I have been shopping around and found a mortgage company which I have heard nothing but good about, and they have sent me a form for anyone to fill out who wants a mortgage. You guys can go ahead and download it at http://www.firetown.com/Loan and email it to mike@firetown.com

Hope to be able to connect the dots here and will let you guys know more once I have more information on what qualifies and what disqualifies an applicant.

Mike

the banks absolutely have financing available but will require a down payment of mabe 15-20%

u r right the interest rate is a bit higher and the terms are a bit shorter.

Something else to think about is if you have a loan originating in C.R. can you write off the interest amount from your U.S. income taxes, such as with a primary residence or secondary home loan in the states! I don't know.

I'm sorry, but I have to beg to differ with nancy nj. The banks in CR do NOT have money to loan, and any loan in CR with a bank is going to require that you already have most of the money available to you from other sources, they will carry a huge interest rate, and - in short - do not have terms that are at all attractive. As for being able to deduct the interest on your home mortgage, I doubt very seriously that - if you had a mortgage in CR - the IRS would allow you to take that interest deduction. I could be wrong on all counts, and would love to be shown to be wrong, because we would dearly love to be able to make a very small loan for construction, but have not been able to find any financing, either in CR, or in the states. Finally, I have already talked to the folks at the company Ticoville is talking about, and they not only do not offer loans, they are only brokers for loans, and they told me that there is no mortgage money presently in CR.

I'll second what jdocop says. Many folk here that were building here, have had to stop as the banks won't pay out any more funds. Maybe you can look for a desperate seller who will carry a mortgage.

financing IS available

there is generally about a 25%down payment required and the terms are less than the 30 years

anyone familiar w/HSBC's mortgage program?

they have some interesting info on their website.

Yes, I have already talked to them (HSBC), and despite what their website says, they are NOT loaning money. Their terms include the following (as I have already posted): you must already have on deposit with them an amount equal to what you want to borrow. You must have a huge down payment. Their interest rate is at least 16.25%. The term of any loan is not only less than thirty years, but more like ONE year. That is not what I can call financing. Hell, if I had the money, or if I thought I could accumulate it on my own in only one year's time, I wouldn't be asking for the loan!

Loan Process
Documentation Needed and Other Pertinent Information
HSBC is committed with its customer service, we want you to have a pleasant experience working with us, and therefore we want to keep you well informed so there are no surprises thought the lending process. We hope to make your experience similar to that in the USA or wherever you hail from and provide an incredible level of customer service. Thanks for taking the time to contacting us!!
Below is all the information that is necessary to send a loan to underwriting: 
Numbers 1-8 are needed to start the loan process
Numbers 9-12 are required in some cases that we coordinate
Numbers 12-18 are required documents and procedures needed after the loan process has been started that we also coordinate. 
We will coordinate the entire process and all parties involved
Please be advised that computer screen printouts normally do not suffice as statements and that our preferred method of delivery for all of these documents is scanned in .pdf format, emailed to us.
All related files should be scanned together as a whole while unrelated files should be done separately, for example, both W-2s together as one scanned document while identification papers should be scanned separately of bank statements.
If you wish to protect your private information, please take steps to remove important numbers before sending us those documents. We will not white out private information; this is the responsibility of the customer.
Providing the documentation in this manner serves to expedite the entire process.
Requirements:
Purchase agreement (or earnest money contract as referred to here).  A copy of the earnest money check can’t hurt either – down payment. 
Copy of passports and drivers licenses
Loan app. complete and signed – borrower’s authorization as well, which will we give the mutual funds, stocks, etc..) to prove source of down payment/reserves.
2 months worth of pay stub copies (wage earner only)
2 years tax returns – all pages
If self employed or commissions earned by borrower exceed 25% of the gross income, we will also need:
      a. Corporate/Partnership tax returns with all schedules attached for prior 2 years
      b.  Profit and Loss Statement for year to date (signed and dated)
      c.  Balance sheet for year to date (signed and dated)
Know your customer form

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

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.

What ever happened to "contract for deed"?

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

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.

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."

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

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.

It would be helpful if you did not speak "in code". It also adds more credibilty to your opinion.

LOL! I too am an old timer who much prefers not to deal with "code".

we say tomato, she says tum8toe.......I have no response to her language.

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.

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.
==

You are correct, Paul. I wrote to those folks, too.....and, I know that they were well aware that the majority of their constituents were not in favor of their action, but they went ahead anyway....

Here's a quick - and reliable - update for folks like nj; see this morning's AMCOSTARICA's article on credit in Costa Rica here: http://www.amcostarica.com/

"i have not applied for a loan w/anyone yet in c r "

Well I suggest that you do before you try to tell others what it takes to get a loan in Costa Rica.

La Nacion of yesterday, 28 october - 9 out of 10 construction projects in Guanacaste are shut down (20,000 workers unemployed), with the expectation that in a couple of months an additional 40,000 workers unemployed (total=60,000 just in construction). Reason? No loans/credit to anyone!! If you can believe this, the president of the Central Bank claims that absolutely no relationship exists between unemployment and lack of money from loans!!! Wht do we do with a bunch of desperate people with no jobs? Dramatic Increase in crime!! This situation is absolutely the most serious I have ever experienced in my life. And, still no TLC out of the Assemblea - which will only intensify the crisis to epic proportions!! I'm not sure how anyone is going to be able to ride this out!!

A very scary thought, and I hope to hell you're wrong, Newman. 'Cause if you're right, CR won't be a very nice place for gringos pretty soon.

Very scary considering that I wrote this before becoming aware of the assault of the three young ladies, followed by the summary execution of one of them! And, the head of the police forces still considers organized futbol games and social reintegration is the solution to the problems with these animals!!!