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he following article was written by Mike
for
www.vallartarealestateguide.com.
Gold Rush Days are Here Again
As with the
old gold rush, the new one is attracting all kinds of entrepreneurs,
the ethical and competent along with the opportunists. There are big
players and small, some national brands and some local.
So if you are contemplating financing your dream home or vacation
retreat, beware. Do your homework, or as we say in the industry,
conduct your ‘due diligence’.
There are several mortgage companies advertising locally, so now at
least you have a choice. Here are some points to ponder. Ask your
loan officer for some business references, people who have
successfully done business with them before. They are few and far
between now due to the infancy of the industry, but if the broker
cannot name anyone, you should be concerned.
If you are dealing through a real estate broker, ask for a
recommendation to a mortgage broker. They will be more familiar with
the local business practitioners and will be inclined through
self-interest to suggest someone with a successful track record.
Puerto Vallarta is a ‘small town’ in which to do business.
Unscrupulous operators have a short shelf life here.
Most of the lenders, brokers and borrowers are American or Canadian
citizens and the business model is almost identical to the one back
home, however there are no US federal protections provided here in
Mexico.
The first step is to complete a loan application. This provides the
lender with enough information to determine your creditworthiness.
You will be asked to pay some fees in advance to cover the costs
involved. These could include fees for a credit report and an
appraisal. Credit reports are simple for the broker to obtain and
are typically under $50. An American style appraisal here is more
expensive than back home due to the lack of market information
available. In my experience it takes three times as long to do an
appraisal here resulting in costs in the $750 to $1250 range. There
should be no fee for processing the loan application at this stage.
There are no ‘Truth in Lending’ laws applicable here in Mexico so no
‘Good Faith Estimate’ is required, but you should ask for and
receive an estimate of costs and interest rate. Get it in writing,
even though it may not be binding or enforceable. It will go a long
way towards providing some peace of mind for you and credibility for
the broker.
Before handing over your deposit money you need to know who is being
entrusted to hold the funds. A large company likely will have a
trust account set up at a local institution but a small broker may
wish to hold funds in his own account. This would not be legal in
the States and is not a good idea here. For your protection insist
on the opening of an escrow account with a third party such as an
attorney or title company. Both are well represented here in
Vallarta.
When you are ready to commit, but before you make a final choice,
evaluate the communication habits of the persons with whom you have
been dealing. Insist on good communication. If you have not been
getting prompt and courteous feedback up to this point, its unlikely
to change.
Remember, the financing business runs on information. The more you
can supply regarding your creditworthiness and the more you and your
real estate broker can provide on the collateral property, the more
likely you are to succeed.
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