Choosing the mortgage broker you work with to obtain your mortgage and to coordinate the closing is a decision you should take seriously. Aside from wanting the best deal available, you need to have confidence in your loan officer since you are going to be working closely with this person for a minimum several months. At Cross Border Investment we are committed to providing a superior level of customer service. We understand that many of our clients are not physically in Mexico throughout most of the process and that there can be sources of anxiety including distance, language barrier and differences in the processes. We see it as our duty and responsibility to take as much of the worry out of the transaction as possible and to stream-line the process. Cross Border Investment has significant experience in the industry, and has built strong relationships with the lenders, trust banks, Notarios realtors and developers. We are 100% bi-lingual, located in Mexico year-round, and do all of our processing in Mexico Cross Border Investment’s only business is mortgages for Mexican properties – allowing us to focus on what matters most to you. CBI was founded on the basis of providing premium service understanding client’s needs.
You need to first contact a loan officer at Cross Border Investment or fill out the prequalify form. Having a good idea about your income, monthly payments and credit score will be helpful. Your Cross Border Investment loan officer will explain the process, and perform verbal prequalification. He will then be able to send you the corresponding documentation checklist so you can work towards a bank/ lender prequalification.
You should contact Cross Border Investment whose job is to match you with the best loan program for your needs. After you complete a verbal prequalification with your loan officer, he will then send you the corresponding documentation checklist for the best loan program. You will then forward the documents to your Cross Border Investment loan officer, and he will fill out the various applications and disclosures needed for submission to a lender.
There are three types of prequalification:
You can submit your information via the prequalify page or your can have a conversation with your Cross Border Investment loan officer over the telephone to provide the most vital information. The loan officer should be able to give you an idea about loan amounts, interest rates, monthly payments, etc.
The verbal prequalification should be completed at the very beginning of the process to provide you with more specific information, and to allow the Cross Border Investment loan officer to match you with the best loan program.
The loan officer at Cross Border Investment will request verification of income (usually bank statements/ pay stubs/ tax returns) and your credit report. Your loan officer will review this documentation, and provide you with examples of loan amounts, interest rates, monthly payments, etc. This analysis is not a loan commitment by a lender.
Bank/ Lender Prequalification
This prequalification is sometimes referred to as a lender/ bank conditional loan approval. Cross Border Investment has received all the necessary documents to qualify you, and your loan file has been approved by the lender. You are in a position to begin the closing process with the Notario. This prequalification is for clients who have signed a sales contract and are committed to purchasing a property, or clients who are confident they are going to purchase a property but have not signed a sales contract yet.
Yes. It is highly recommended to obtain your loan approval as early as possible.
Article 24, Fraction I of the Political Constitution of the United States of Mexico (Artículo 27, fracción I de la Constitución Política de los Estados Unidos Mexicanos) dictates that foreigners cannot directly own land or water within 50 km (31 miles) of the shore or 100 km (62 miles) of Mexico’s borders*1. Mexico’s constitution was implemented in 1917, so the restricted zone was employed to protect against military attacks.
As you can imagine, it was considerably easier to come up with an alternative to the constitution, as opposed to an amendment. As a result, after 1970, the Bank Trust (Fideicomiso) system was implemented. A permit from the Secretary of Exterior Relations (SRE for its acronym in Spanish) is issued which allows the establishment of the individual bank trust. The trust grants to the beneficiary (the buyer) to use, modify, borrow against, rent or sell the property at his/ her discretion. This is not a lease and your property is not considered an asset of the trustee bank*2.
The trust also provides estate planning. The buyer is the beneficiary to the trust, and the substitute beneficiary is the person who inherits the property in case of the beneficiary’s death. The substitute beneficiary can be modified, and the trust would supersede a will in your home country.*1
When we hear the word Notario, we automatically think of a Notary Public. However, a Notario in Mexico is regarded with more prestige. In the case of your property purchase, the Notario acts similar to a closing lawyer in your home country – Cross Border Investment works with the Notario to order the permits and certificates, to write the deed, and coordinates the signing of the deed with the Notario. A Notario is a law professional who brings justice security to acts and facts before the law. The requirements to be a Notario vary from state to state, but the general terms require that he have a law degree, that he has worked in a Notario’s office, that he has a good professional and personal.
A Notario is a law professional who brings justice security to acts and facts before the law. The requirements to be a Notario vary from state to state, but the general terms require that he have a law degree, that he has worked in a Notario’s office, that he has a good professional and personal reputation, and that he passes a series of exams.*3.
The Notario used for your real estate transaction will be one of the most reputable in the region. Aside from the vigorous process it takes to become a Notario, the Notario must be approved by the lender – leaving us with the best of the best.*3
Mexican migratory status/ residency is required of all non-Mexican to purchase or sell real estate.
Title insurance provides for protection from financial loss on a specific piece of property due to a title defect, lien or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.*4
Title insurance is common and sometimes even required in parts of the US and Canada. In Mexico, title insurance is not required by any of our lenders. This is primarily because the Notario has to provide a certificate of no and the lenders are comfortable with this protecting your investment/ their collateral.
The certificate of no liens (certificado de libetad de gravámens) in Jalisco is described as: “the legal document that makes record the situation – free of liens or with lien – in which the determined property or title is found, according to the registry and documents existing in the archives” *5*4
When your loan officer at Cross Border Investment discusses closing costs, we refer to all the costs required to complete the corresponding real estate transaction – these include financing fees, Notarial fees, trust fees and taxes.
Closing costs in Mexico can sometimes come as a surprise to some buyers. The closing costs are generally paid by the buyer, and the seller is usually responsible for the realtor’s commissions and capital gains, if applicable. Closing costs should be considered, as you will need to have the down payment, closing costs and perhaps mortgage payment reserves available in cash.
The basic theory to Mexican closing costs is that the fees to purchase a property can be seen as comparatively expensive, but the costs of maintaining the property are significantly low. It is generally said that for every $100,000 USD of property g the property are significantly low. It is generally said that for every $100,000 USD of property value, you pay $100 USD in annual property tax. So, for a property worth $400,000 USD, you will pay approximately $400 USD per year in property tax. Surely, you cannot expect that in the US or Canada!
It is rather difficult to discuss specific numbers without the purchase price and loan amount. Some closing costs are a percentage based on the value of the property, others a percentage based on the loan amount, and others are fixed. Closing costs as a total percentage work on a sliding scale – the higher your purchase price and loan amount, the lower the closing costs represent as a percentage. Generally, when purchasing with a mortgage you can expect the closing costs to represent 4-12% of your purchase price. Please contact your Cross Border Investment loan officer for a customized estimate.
It is nearly impossible for closing costs to be 100% accurate – this is because of two important variables, the first one being conversion rates. Some of the closing costs are charged in pesos, some in USD, so we are subject to exchange rates. It is highly unlikely for the conversion rate the day the estimate is prepared to be the same rate as the day the costs are paid. The second important variable is that some of the closing costs are based on the fiscal value of the property, and the fiscal appraisal is performed as part of the closing process. For the purposes of the estimate, we base the costs on the purchase price.
Closing costs may vary from lender to lender and state to state, but generally include the following:
• SRE permit
• RNIE (National Registration of Foreign Investment)
• Trust initiation Fee
• Trust first year fee
Taxes & Notario Fees
• Transfer tax
• Trust registration
• Mortgage registration
• Property registration
• Tax (catastral) appraisal
• Notario services
• Closing coordination
• Bank origination
• Lender appraisal
Please contact your loan officer at Cross Border Investment for a customized estimate based on your purchase price and loan amount.
“For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities… A second home is a home that you choose to treat as your second home.
“Since there is no specification of the location of the second home, Mexican property owners are able to take advantage of this tax benefit as well.
It is recommended that you contact your account to assure you will be able to qualify for the deduction.