So, how do borrowers get financing to purchase their home in Costa Rica when the banks don’t help them? 100% financing is the answer!
Here is a scenario: an expat without residency in Costa Rica.
Let’s assume a borrower would like to buy a home for $200,000, but they are not a resident of Costa Rica yet. Would they have to come up with $200,000.00 cash, right? No, there is another solution.
The 100% Financing Solution
With our assistance and our sister company, Gap Real Estate, they can buy a home with 100% financing. We work to get the owner or seller of the house to move the property into a trust. The property remains in the trust until the property is paid.
While this process is underway, the Seller is asked to finance $120,000 at perhaps 8% (negotiable). The buyer is given a mortgage of $80,000 at 12%. They will have an average interest rate of 9.6%. That competes with mortgage loan rates at Costa Rican banks!
Of course, putting money down would be even more attractive… for example, if they had a property or business to sell back in their country of origin. But, there is often a time delay between selling your home or business to putting down a decent down payment.
We generally process loans in terms of three years. And, “If they are never a day late or dollar short” on their loan payments, there is a perfect chance of a private lender (you) renewing the loan (about 99% chance of renewal). During these three years, they can obtain their residency and apply for a traditional mortgage offered by a local bank.
Paying Off the Loan
When the sale of the expats home or business finalizes back in their home country, they will have the 20-30% down payment required by a local bank to secure a new mortgage loan. Once they have the funds from their new loan, they would pay off the original mortgage with the seller. The house’s title moves from the trust to the expats (borrowers) name.
This example scenario applies to local Costa Rican citizens and not just foreigners. It is a feasible and viable solution for all parties involved — Realtors, Sellers, and Buyers.
In closing, 100% Home Financing is an excellent opportunity for private lenders to fund and profit from secured equity loans.
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