Buying Your Home in
Paradise Mexico
Safe and Easy
Millions of North
Americans travel to Mexico each year. They fall in love with the
charm of the old towns, the beaches, the ambiance and the beautiful
views. There are over 500,000 Americans and Canadians who
own second homes or vacation properties in Mexico. Traditionally,
Mexico real estatepurchases have been limited to investors
with sufficient resources to buy real estate without the need for
financing. Unfortunately, not everyone can afford to pay cash for
property in Mexico. You can now enjoy the benefits of ownership.
Residential Mortgages For Mexico offers FINANCING
to qualified buyers who want to purchase homes in Mexico.
There are steps in the process of buying a home in Mexico and Residential
Mortgages For Mexico can guide you through this process:
- Select a real estate broker you are comfortable with -----ask for references
- Find the right home in the right location for the right price---explore several areas
- Review and sign the offer of purchase and sale, deposit maybe required
Once the offer of purchase and sale has been accepted by the seller the closing process begins. We will introduce you to a lender approved Notary Attorney (Notario). He is your representative and is working for you. In Mexico, certain attorneys are designated by the government as a Notary (Notario), and their services are required for the legal transfer of real estate. They are an unbiased, official representative of the government and have a fiduciary responsibility to all the parties and sanction the contract from a tax and legal point of view. In order to obtain the trust deed, the Notario will:
- Ensure the property is free and clear of any and all liens by checking the Land Registry Office. This is guaranteed by obtaining a non-lien certificate and tax statement. Additional checks are made for outstanding utility bills and municipal taxes.
- Obtain a permit from the Minister of Foreign Affairs to establish the Bank Trust for ownership of the property
- Prepare all documents for both buyer and seller.
- This is the same work that a Title Insurance Co. does in the US. Title Insurance is NOT REQUIRED, but is an option. (We suggest that you don’t incur this expense)
What is a Bank
Trust
Years ago to protect wealthy countries from buying all the land
the Mexican Government created the Bank Trust or “Fideocomisco”
for land that is in the “restricted zone” which is 31 miles inland
from the coast and 62 miles from the border. In order to buy land
in these areas it must be purchased through a trust. The Mexican
government established the trust system as a way for foreigners
to OWN PROPERTY in Mexico. By making ownership
pass through the trust process, the bank is required to check ownership,
insurance, and liens against the property.
How Does the Trust Work?
- The Trust establishes
the legal basis by which the bank holds legal title to the property
in order to act on the foreigner’s behalf. (This is
the same as if you have a mortgage in the US) This
trust deed assures the foreign buyer of all rights and privileges
of ownership. You own it enjoy it. The Foreign
Investment Law, a Constitutional amendment created in 1973 and
amended again in 1994, allows the trust to be established for
a term of 50 years and is renewable any time during its existence
by simple application.
The Bank (trustee) holds the trust deed for the person who purchases the property (beneficiary). The property is not part of the bank's assets and cannot be liened or attached for any other obligations. The purchaser is the beneficiary and has all rights of enjoyment of the property including the ability to remodel, lease, and mortgage, pass to their heirs or sell the property at any time.
Bank trusts are established by a Mexican Notario (Notary), following the receipt of a permit by the Minister of Foreign Affairs. This procedure is routine due to the large number of foreign property owners. The forms are standardized and the entire process is usually completed by the notary as part of the closing procedures.
What does the Bank Do? - It is an important link between the foreigner and the government. The bank accepts full technical, legal and administrative responsibilities and protects the beneficiary's (YOUR) interests. While the bank is the trustee of the property, they have a statutory responsibility to follow the beneficiary's (YOUR) instructions concerning the property. Therefore, the control of the property is in your hands - NOT the banks.
The Foreigner Beneficiary can expect from the Trust Agreement
- The beneficiary can occupy the property for the life of the trust, (that can be renewed).
- Title to the property may be transferred to the foreign beneficiary in the event that he acquires legal capacity to hold such property, or to any legally qualified person he/she may designate.
- The trust can also be heired to your family by naming them as substitute beneficiaries in the event of your death. The property can also be sold to a person legally authorized to own land or to a foreigner via a trust.
Beneficiaries are allowed
to modify their property. Construction, in accordance to local zoning
regulations, is permitted at the owner's expense. Where a loan or
mortgage is involved to finance the property the first beneficiary
is the lender and the purchaser is the secondary beneficiary until
the loan is paid of. The trust, assures the foreign buyer of all
the rights and privileges of Mexico property ownership, including
the right to remodel, lease, mortgage, or sell the property at any
time.
Ownership Costs
- Closing costs are paid by the Buyer and depend upon the value
of the property purchased. They can vary based on location and the
type of property that is purchased.
Costs Associated with Owning a Home in Mexico
$300,000 Selling Price
30% Down payment
$210,000 Loan Amount
Application Fee
$395
Underwriting Fee
$450
Appraisal Fee
$300
Survey Fee
$350
Lender Origination Fee
Selling Price 1.5% $4500
Local Transfer Tax ISAI
Home Value 2% $6,000
Notary Fee ( Notario)
Loan Amount 2% $4200
Registration Fee Public Reistry
Home Value 0.5% $1500
Certificate of Freedom of Liens
$35
Trust Account Set Up Fee
$575
First Year Trust Account Fee
$575
Escrow Account Fee
$500
Foreign Ministry Permit SRE
$955
Foreign Investor Registration
$350
Total Fee**
$20,685
Est. cost +or-
Title Insurance
can be purchased from First American or Stewart Title,
who require an application fee of a flat $350, total cost $2,550.00.
However, we work lenders that DON’T
require title insurance.
Property Taxes - Property taxes are very low. The
property tax, known as "predial" is a rate of .08% of the assessed
value. (Taxes on the above sample would be about $175.00 per year).
Historically, property taxes have always been low because they have
never been perceived as a source of revenue for the government.
Our
Commitment to Customer Service
Our experienced team in the US and in Mexico will guide you through the process. To start the loan application process please complete the pre-qualification form and fax to our office .The items we will need to complete the process are:
- Complete copies of last two (2) years personal federal tax returns
- Complete copies of last three (3) months bank statements
- Last three (3) months pay stubs for borrower/co-borrower
- Copy of passport photo ID
- Copy of marriage certificate
- Copy of birth certificate
- Verification of Employment or employment contract that states salary, length of employment, contact and phone number,
- Copy of the purchase contract
- Contact information for the realtor
- Complete loan application and disclosures
An application fee of $395.00 is charged for credit processing. Please overnight the information along with your check to:
Residential Mortgages
For Mexico
1661 Wadsworth Blvd.
Lakewood, CO 80214
800-778-6272
