What You Should Consider Prior to Financing
Better to be safe than sorry.
What you should know prior to obtaining a loan.
Those who closely followed the real estate developments in the past couple of years know that the conditions for Europeans who consider investing in Florida real estate have never been better:
- Rock-bottom prices: Real estate prices are at an all-time low. Experts opinions on the recovery of the real estate sector may differ, but they all agree on one thing: The current downward trend in real estate pricing isn't going to last.
- The real estate market is currently a buyer’s market: When it comes to negotiating, buyers enjoy maximum flexibility. Right now, potential buyers can choose from an unparalleled real estate inventory and have the upper hand in real estate negotiations.
- Favorable exchange rate: Due to the purchasing power of the Euro Europeans can buy their dream home with low expenditure.
- Low U.S. interest rates: In Florida, Europeans can take out a loan for 80% of the selling price. U.S. banks offer a wide variety of financing options. And the best thing is that U.S. interest rates are dropping, which makes investing in Florida real estate even more attractive.
Europeans already took advantage of the favorable conditions: They are buying real estate. And they obtain financing. Due to the large number of banks, real estate brokers and financing options, you should acquire as much information as possible up-front, if you are planning on investing in Florida real estate. Today, obtaining a loan or mortgage in Florida is relatively fast and straightforward. However, not all loans are equal.
How do you know that you receive comprehensive and, most importantly, the best possible advice? Below are a few questions you should ask your banker or mortgage broker prior to applying for a loan to ensure that you will receive expert advice on selecting the best financing option.
Questions to ask about financing:
- What type of loan/mortgage would you recommend? Why?
- What are the advantages and disadvantages?
- What are the maximum fees that I can incur?
- How long will today's interest rates and fees be valid?
- And, if you are able to guarantee this interest rate for the entire credit period, what happens if the closing has to be postponed for some reason?
- Which index is this interest rate based on?
- How did the index develop within the last 12 to 24 months?
- How do you expect the market to develop in the future?
- What is the financing margin for this particular type of loan?
- Does the recommended loan option match my individual financial planning?
- How often can interest rates be adjusted? To what extent can interest rates be adjusted?
- And how often will monthly payments change as a result? To what extent can interest rates be adjusted?
- Can I get pre-qualified for financing before making an actual offer?
- How soon can you provide a loan commitment in writing?
- How can I calculate/budget for future interest rates?
- What are the consequences, if the Federal Reserve bank lowers or raises the interest rates?
Questions about professional experience and expertise:
- How long have you been working in the finance sector? What is your professional experience?
- Can you/your company provide professional references?
- What is your credit approval percentage?
- During which time period?
- How big are your credit volumes?
Banking institutions and mortgage brokers usually provide consultation free of charge. You should take advantage of this to evaluate the service quality of a particular institution.
Author: Kirsten Paul (info@paul-finance.com)
Website: www.paul-finance.de
Kirsten Paul is a qualified banker and mortgage broker who specializes in providing consulting services for European investors in Florida. After living in the Sunshine State for many years, Kirsten now works from her Munich and Florida offices on a regular basis. Phone: +1 (239) 565-7057
