Mortgages: Overview

Purchase new property or Refinance an existing loan are very popular financial service in the US . In recent years the interest rate is in all time low, a major factor for the massive mortgage transactions.

Major benefit for home owners is that the interest paid against the loan is 100% tax deductible. The typical interest on home mortgage is significantly lower compared to other debts such as credit cards, makes it an attractive and relatively cheap tool of financing.

Mortgage transaction is a major financial event that requires an efforts from different parties; The borrower(s), the lender (a bank or broker), loan processors, legal team, insurance team, tax consolers, and others.

A typical monthly payment would include:

1. Payment for Interest and in some plans Principal.
2. County and state taxes.
3. Home owners insurance.
4. PMI (primary mortgage Insurance) – if required by the lender.

Unlike the common practice in Israel, there is no requirement for life insurance for the borrowers . However is recommended for home owners to purchase life insurance to protects their families from financial disasters .

Purchasing new property

Purchase new residential home would be from a type:

1. Primary home – owner occupied - this loan has the best rate and tax benefits.
2. Second home – This loan has some tax and rate benefits.
3. Investment property – This loan has a higher interest rate.

Refinance an existing property

Refinance is a common practice to change the loan terms to a better terms, pay out debts (credit cards, car loan) and as a tool to cash out some of the home value.

Refinance an existing property would be from a type:

1. Primary home – owner occupied - this loan has the best rate and tax benefits.
2. Second home – This loan has some tax and rate benefits .
3. Investment property – This loan will have a higher interest rate.

Who is qualified for purchase/ refinance a home in the US:

There are many factors that directly affect the qualification process for mortgage.

An ideal borrower(s) would be:

1. An American citizen / Green card holder or a legal working permit holder.
2. Have credit score (in the US) over 680 points (in scale of 800).
3. Resident of the US for at least 2 years.
4. Able to provide 2 years of working history.
5. have no criminal record.

Mortgages for foreign nationals in the US - refinance or purchase

Foreigners are considered as not American citizens or Green card holders. They would have to provide additional information in order to be qualified for a loan. Additional information may be of type (some or all).

1. Credit history from the origin country.
2. Work and residency history from the origin country.
3. Bank accounts and assets records from the origin country.
4. Proof of legal working permit in the US. Additional immigration and work status documents may be required.
5. Only certain working permits in the US would be qualified for a mortgage, it is recommended to consult with a loan specialist on this matter.
6. For investment properties a higher interest rate and only certain loan plans may be available.
7. Special practice is required for Israelis who don’t have Social Security Number in the US.

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