The mortgage lending system of the United States until recently had absolutely no interest in most of the world community. But since 2007, it has not been discussed by every person. It was the mortgage lending system of America that became the main reason for the collapse of the economies of world powers and small states around the world. So far, not all countries have managed to recover from the financial crisis.
The main principle of issuing first mortgages in the United States in the “pre-crisis period” was the creation of a guarantee fund for debt mortgage obligations. To create the Fund, the World Bank provided the country with a 15-year loan of US $ 500 million with a 7-year grace period.
The purpose of the creation of this Fund was for this organization to redeem long-term bonds issued by American banks. When the method of issuing loans for the purchase of housing became in-line, the quality of credit transactions deteriorated dramatically. And at the beginning of 2006, it became completely deplorable. It was then that many credit organizations reminded the Fund of the obligation to redeem long-term bonds from them.
But, as you know, this regulatory structure simply could not handle such a number of loans. The result was the bankruptcy of many well-known banks in the country.
Modern terms for local mortgage lending
Unfortunately, it is difficult now to name certain frameworks and terms in all banks in America, since many credit institutions have not yet recovered from the financial crisis, but if we assess the situation as a whole, the terms for mortgage lending in the United States are as follows:
- loan term – 1-30 years. Although most banks do not yet issue mortgages for over 15 years.
- interest rate on the loan – 6% per annum. Most often, the interest rate is floating and is tied to the LIBOR rate.
- the size of the down payment is 10-20%. It is difficult to say if banks are now issuing, as a few years ago, loans without a down payment. It used to be a normal practice in America, but after the crisis, credit structures began to behave more cautiously.
- even after the crisis, the acquisition of real estate in the primary or secondary markets is not fundamental for American bankers. Therefore, buying a home in a house under construction, or an already finished object, will not particularly affect the terms of lending.
- the purchase of real estate in the United States will not affect the conditions of your stay in the country in any way. That is, owning American real estate does not automatically make you an American. To obtain the right to permanent residence in this country, you must become the owner of the “Green Card”, which can be obtained after marriage with an American, or if you have relatives in the United States.
Also, children adopted by citizens of this country have the right to get a Green Card, which is at the same time an identity card of a citizen of this country. You can also get the coveted document by opening your own business in the United States, however, only its registration will cost a foreigner $25,000 – $50,000. But it is still cheaper than investing in the country’s commercial real estate. Under the terms of this program, a foreigner who has bought commercial real estate worth at least $ 500,000 receives a Green Card in 6 months.