Would you like to know what are the requirements to buy a house in the United States? Pay close attention, because although this can be a rigorous process, especially if you are a foreigner, Latino or immigrant, here we are going to tell you how.
Especially since the real estate market has experienced very abrupt changes since the start of the pandemic. Which has involved changes, new requirements, and special preparations.
To measure these changes, for example, home prices have suffered a double-digit percentage increase in the main cities of the United States, (compared to the previous year), according to a report by the National Association of Realtors.
How to buy a house in the United States?
Buying a house in the United States is the dream of many Hispanics, so you are likely wondering how to access the US real estate market.
And while it’s not an impossible mission, it’s not an overnight goal, like any money investment you make in the United States.
Undoubtedly, you need to fulfill certain steps to qualify for a home in this North American country.
You will also need to thoroughly research the market, contact an expert, and meet all the requirements associated with investing in real estate.
Additionally, you have to be aware of the factors that tend to inflate the price of homes and have realistic expectations. In other words, the purchase of your new home must be adjusted to your current needs, and above all, to your financial capacity.
A study by the National Association of Realtors (NAR) revealed that in 2021, 61% of foreign property purchases were made through mortgage loans.
That is why you must know that foreigners, Hispanics, or immigrants do have access to the US real estate market, but in the same way, they must adhere to a series of very important credit and tax regulations.
Requirements to buy a house in the United States
If you are Hispanic and want to buy a house in the United States, the content of this guide will likely be useful, valuable, and interesting to you. Especially if you have little knowledge of the subject, and feel lost, confused, or overwhelmed.
So pay close attention to the documents you must request, and the steps you must take if you are planning to be the new owner of a home:
1. Prior approval letter
The first document you need when buying a house in the United States is the pre-approval letter. This is processed at the bank and is essential to obtain a loan.
This letter contains general information about your finances, tells the lender what your credit history is like, and also reports your debts and assets (basically it lets them know if you can pay the loan).
For them to give you a pre-approval letter, you must present several documents to the bank and have a credit history of at least two years within the United States.
This first step will give you an idea of the amount that you could be financed, and based on this, you could do a more formal search for the house of your dreams.
However, you must bear in mind that the pre-approval letter does not guarantee obtaining the loan because during this process you could contract bad debts, lose your job, or experience another unfavorable financial situation.
If so, your loan could be frozen and you would have to explore other financing options.
In any case, you will have to advise yourself on the main requirements to apply for a mortgage and home loan in the USA.
You can also investigate some of the United States Government programs that help the Hispanic population to have greater access to the real estate market.
FHA mortgage loans and HUD housing, and the voucher program for home purchases, are some of them (according to a report by USA Gov ).
The idea is that you find out their criteria, documents, and requirements, and then determine if you are eligible for any of them.
2. Contact a real estate agent
Once you have the estimated amount of financing, the next step is to find a real estate agent who will guide, advise and accompany you throughout the process.
This professional is your best ally when buying a house in the United States. He will offer you up-to-date, personalized, and reliable information about neighborhoods, properties, and documentation.
Make sure your real estate consultant has their license up to date so that they can help you legally and transparently. In addition, it is worth noting that you should not worry about the realtor‘s commission, since the seller is responsible for paying it.
3. Offer letter
If you found a property that you liked, and that also fits your budget, you can ask the seller for the property’s disclosure letter.
This document details the conditions of the house; and if you agree with them, the next step is to present the offer letter.
Since buyers will receive many offers, your letter should be attractive so that it makes a real difference.
This letter should include both your personal information and some compliments that create an authentic or genuine connection with the seller.
In addition, you must take care of the level of detail. For example, if you are going to offer less money than requested, you must explain the reason precisely.
In summary, if both parties accept the offer, you will be able to continue the process. As long as nothing happens that violates the previously agreed terms.
4. Home Inspection Report
The next step for the buyer is to hire inspection services to receive a detailed report.
The inspection report contains data on the current conditions of the property and also on its structure. For this, a group of experts must inspect the electrical system of the house, the plumbing, the ceilings, etc.
In some cases, sellers may make home repairs based on the data in this report, so the price of the property is not affected.
On the other hand, if the report shows damage to the property that the seller did not include in the disclosure letter, you can withdraw the offer or renegotiate the price.
5. Purchase-sale agreement
In case of continuing with the process to buy a house in the United States, the next thing is to make the purchase-sale agreement; which is nothing more than the formalization of the purchase of the property.
This document is made by the real estate consultant and includes detailed information, such as:
- The actual state of the property.
- The items included in the sale.
- The date of possession.
This step determines the actual market value of the property. It is a process carried out by the bank contracting a third party.
The amount of approval of the mortgage loan will depend on what the appraisal shows (and its importance lies precisely there).
If the appraisal returns a lower price than the sellers are asking for, you can use this document to renegotiate the price.
And if it yields a higher amount than the lender can offer you, you can pay the difference in cash so as not to lose the property.
7. Title deeds
To avoid real estate scams, look for the property titles of the seller in the registry. These documents will determine if the seller has title to the house, or if he can sell it without problems.
Title deeds also reveal important information about the seller. For example, they let you know if he has legal problems, inheritance problems, or even property debts.
You must know that this procedure must be paid by the buyer and that in many cases it is required by the lender.
And although this is not a mandatory step, it can offer you a greater degree of security and avoid scams when buying a house in the United States.
8. Closing Disclosure
This document is provided to you by your lender and contains the final points that were estimated in the pre-approval letter.
Here you will see the exact amounts of the house mortgage, its interest, the monthly payments, and even the possible sanctions that you could face if you do not comply with the financing conditions.
Similarly, the closing disclosure will tell you the exact amount to put in the cashier’s check.
The lender must give you the closing disclosure before you sign to purchase your new home. For the sake of reviewing it carefully.
9. Home insurance in the United States
This step is very important for the lender, as they must ensure that the property remains in good condition until the mortgage is paid off.
In case you don’t know, the bank will keep your home if you can’t make your mortgage loan payments.
Consequently, lenders place a lot of emphasis on insurance, since it allows them to protect the conditions of the home and benefit when it is sold.
10. House purchase signature
The process of buying a house in the United States ends with the signing of the purchase and sale document.
After this, the bank needs a couple of days to process the loan. Once the check is ready and sent to the seller, you will be given the keys to the property and you can move into your new home.
Are you ready to buy your home in the USA?
The steps to buying a house in the United States can be a bit overwhelming, but remember that you will have the support of your real estate advisor throughout the process.
The idea is that you investigate the market in depth, find a good realtor and define an action plan that allows you to invest in your dream property without putting your financial stability at risk.