Buying a house financing

guayaba79

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Ia it possible to get financing in country if you put down 50% ? I would like to buy a home for retirement and vacations and have people there willing to do the legwork and talks with local sellers, but unsure about the procedures. Do I need a visa as well or just a passport? What kind of terms do they offer for financing ? 30 years like the u.s?
 

josh2203

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Ia it possible to get financing in country if you put down 50% ? I would like to buy a home for retirement and vacations and have people there willing to do the legwork and talks with local sellers, but unsure about the procedures. Do I need a visa as well or just a passport? What kind of terms do they offer for financing ? 30 years like the u.s?
We haven't gone through the whole process as in the end the interest rates made no sense to us, but based on what I've experienced/seen/heard, it's good to check the interest rates really well. They can be over 10 %. The minimum requirement for down payment was between 25 % and 30 %, so 50 % should be fine.

One thing we are considering in the future is taking a mortgage in EU and using that to cash-purchase a house in the DR. This is in fact what we are doing right now, getting a mortgage in EU (in my home country) which in a few years, once it has been already somewhat paid off, we could utilize/leverage to get our first house in the DR... This way you don't have to pay the insane interest rates of the DR banks, but you also have to have more resources as you obviously cannot use the DR property as a guarantee.
 

bob saunders

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We haven't gone through the whole process as in the end the interest rates made no sense to us, but based on what I've experienced/seen/heard, it's good to check the interest rates really well. They can be over 10 %. The minimum requirement for down payment was between 25 % and 30 %, so 50 % should be fine.

One thing we are considering in the future is taking a mortgage in EU and using that to cash-purchase a house in the DR. This is in fact what we are doing right now, getting a mortgage in EU (in my home country) which in a few years, once it has been already somewhat paid off, we could utilize/leverage to get our first house in the DR... This way you don't have to pay the insane interest rates of the DR banks, but you also have to have more resources as you obviously cannot use the DR property as a guarantee.
You can do it that way or utilize a line of credit. Secured with a house you own the rate will be lower and the amount higher. If unsecured (no collateral) the interest rate will be higher and the amount small. The rates will still be better than anything you can get it the DR.
 

Manuel01

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Apr 1, 2009
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Like the others already mentioned; Mortage Rates are extremely high here.
And with a Downpayment of 50%, the biggest favour that you can do to the lender is; not be able to make your payments.
They draw this for years and when the late fees, internal and legal fees reached a specific amount. They take your property away and you do get exactly zero of your investment back.
 

Seamonkey

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It's a buyer's market. Ask the owner to pay over 5 years with a healthy downpayment at 0% interest. I've bought properties (In Sosua) this way and also sold one. Many sellers will be more than happy to accept these terms.......if not, walk away.
 
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With the high interest rates many people (Dominicans) try to pay off these loans within 5-10 years. Make sure there is enough room to do extra penalty free deposits to lower the debt.
 

MariaRubia

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In my experience, only certain banks accept non-residents (but they do accept them) for loans. It isn't at all easy to raise finance to buy a property in DR from a bank in another country, but relatively straightforward in DR provided you can show you have income and assets in other countries. In the transaction I was involved in, the buyer could borrow 60%, interest rate was 9.5% and the loan was over a 15 year period. This was when interest rates in the US were running at over 5% so the rate was high but not crazy high.

One thing to be very careful of is the math that a realtor will give you of possible returns you can make if you rent out your vacation home on AirBnB. This last season has been a killer for many AirBnB owners and many are seriously struggling as they haven't had the income they expected. So if you are looking to raise income in this way to cover your mortgage, do a lot of research and be very realistic.
 
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MariaRubia

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Never thought of this but it's very intriguing.

The issue is that in DR a property title can only be in one name. And so if you are buying with stage payments over 5 years, you have to agree at what point you are going to transfer the title to the new owner. If you put down, say, 30% and have a loan of 70% of the value, are you expecting the owner to give you the title (and therefore confirm that you own 100% of the property)? With a charge against it of 70%, we all know that if the new owner doesn't pay the seller, it's very hard to get someone out in DR, and you would have to foreclose on them to get your money.

I'm not saying this isn't done, but I have been involved in quite a lot of property transactions in my time. This type of deal sounds attractive, but when you get into the detail, normally neither side wants to take on the risk.

In addition, if you as a buyer were asking me as a seller to let you pay over 5 years, interest free, then I am losing the interest that the sale price would have earnt over that 5 years. So basically you're asking for a big drop in price. At the moment on a peso savings certificate you can earn 10% interest per year. So over 5 years, the compound interest comes to 61%. Basically this means that if you paid me US$ 500,000 today to buy my house, and I invested that $500,000 at 10%, in 5 years the interest would come to US$ 305,000. If you're asking me to forego this interest, then you're basically asking me to sell a US$ 500,000 for US$ 195,000. Good luck if you can find an idiot who will agree to that.
 

Manuel01

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Apr 1, 2009
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In my experience, only certain banks accept non-residents (but they do accept them) for loans. It isn't at all easy to raise finance to buy a property in DR from a bank in another country, but relatively straightforward in DR provided you can show you have income and assets in other countries. In the transaction I was involved in, the buyer could borrow 60%, interest rate was 9.5% and the loan was over a 15 year period. This was when interest rates in the US were running at over 5% so the rate was high but not crazy high.

One thing to be very careful of is the math that a realtor will give you of possible returns you can make if you rent out your vacation home on AirBnB. This last season has been a killer for many AirBnB owners and many are seriously struggling as they haven't had the income they expected. So if you are looking to raise income in this way to cover your mortgage, do a lot of research and be very realistic.
With 50% downpayment he want have any problems finding a bank that is willing to "steal" his money.
 

bob saunders

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The issue is that in DR a property title can only be in one name. And so if you are buying with stage payments over 5 years, you have to agree at what point you are going to transfer the title to the new owner. If you put down, say, 30% and have a loan of 70% of the value, are you expecting the owner to give you the title (and therefore confirm that you own 100% of the property)? With a charge against it of 70%, we all know that if the new owner doesn't pay the seller, it's very hard to get someone out in DR, and you would have to foreclose on them to get your money.

I'm not saying this isn't done, but I have been involved in quite a lot of property transactions in my time. This type of deal sounds attractive, but when you get into the detail, normally neither side wants to take on the risk.

In addition, if you as a buyer were asking me as a seller to let you pay over 5 years, interest free, then I am losing the interest that the sale price would have earnt over that 5 years. So basically you're asking for a big drop in price. At the moment on a peso savings certificate you can earn 10% interest per year. So over 5 years, the compound interest comes to 61%. Basically this means that if you paid me US$ 500,000 today to buy my house, and I invested that $500,000 at 10%, in 5 years the interest would come to US$ 305,000. If you're asking me to forego this interest, then you're basically asking me to sell a US$ 500,000 for US$ 195,000. Good luck if you can find an idiot who will agree to that.
One name, really? Several of my properties are in both my wife's name and mine, a couple more in her sons and mine, and my BIL and I co-own a property.
 

Seamonkey

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Oct 6, 2009
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The issue is that in DR a property title can only be in one name. And so if you are buying with stage payments over 5 years, you have to agree at what point you are going to transfer the title to the new owner. If you put down, say, 30% and have a loan of 70% of the value, are you expecting the owner to give you the title (and therefore confirm that you own 100% of the property)? With a charge against it of 70%, we all know that if the new owner doesn't pay the seller, it's very hard to get someone out in DR, and you would have to foreclose on them to get your money.

I'm not saying this isn't done, but I have been involved in quite a lot of property transactions in my time. This type of deal sounds attractive, but when you get into the detail, normally neither side wants to take on the risk.

In addition, if you as a buyer were asking me as a seller to let you pay over 5 years, interest free, then I am losing the interest that the sale price would have earnt over that 5 years. So basically you're asking for a big drop in price. At the moment on a peso savings certificate you can earn 10% interest per year. So over 5 years, the compound interest comes to 61%. Basically this means that if you paid me US$ 500,000 today to buy my house, and I invested that $500,000 at 10%, in 5 years the interest would come to US$ 305,000. If you're asking me to forego this interest, then you're basically asking me to sell a US$ 500,000 for US$ 195,000. Good luck if you can find an idiot who will agree to that.
I've done it several times. You need a reputable lawyer. He keeps the deed until the final payment. If you're the seller and the buyer misses more than two consecutive payments the contract is void and you keep the house. As far as the interest, the seller gets a downpayment, so the interest loss isn't on the sale price. You can then take the downpayment and put it into a CD or you can say no to the sale and wait 3, 5, 10 years. Depends on the market and the area.
 
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JD Jones

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One name, really? Several of my properties are in both my wife's name and mine, a couple more in her sons and mine, and my BIL and I co-own a property.
She meant one seller/group/corp and another buyer/group/corp.
 

MariaRubia

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One name, really? Several of my properties are in both my wife's name and mine, a couple more in her sons and mine, and my BIL and I co-own a property.

I think it's different for families. All I can say is that whenever I have been involved in property transactions, that question has come up and each time the lawyers point out the issue to do with whose name is on the title.
 

MariaRubia

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Jun 25, 2019
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I've done it several times. You need a reputable lawyer. He keeps the deed until the final payment. If you're the seller and the buyer misses more than two consecutive payments the contract is void and you keep the house. As far as the interest, the seller gets a downpayment, so the interest loss isn't on the sale price. You can then take the downpayment and put it into a CD or you can say no to the sale and wait 3, 5, 10 years. Depends on the market and the area.

Yes but you're only getting interest on the downpayment, and you are foregoing interest on the amount that is owed to you.

If your buyer is creditworthy he can go to a bank and get a loan. If the reason he wants seller finance is because he can't get a bank loan, that should worry you. If he is trying to get seller finance as a way of paying no interest on the loan, then you should understand that you are losing that interest. You could be earning 10% interest on that money, the same 10% that he would be paying for a mortgage.
 
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bob saunders

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Yes but you're only getting interest on the downpayment, and you are foregoing interest on the amount that is owed to you.

If your buyer is creditworthy he can go to a bank and get a loan. If the reason he wants seller finance is because he can't get a bank loan, that should worry you. If he is trying to get seller finance as a way of paying no interest on the loan, then you should understand that you are losing that interest. You could be earning 10% interest on that money, the same 10% that he would be paying for a mortgage.
But when you have been trying to sell for years with no takers you might think differently.
 

Seamonkey

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Oct 6, 2009
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Yes but you're only getting interest on the downpayment, and you are foregoing interest on the amount that is owed to you.

If your buyer is creditworthy he can go to a bank and get a loan. If the reason he wants seller finance is because he can't get a bank loan, that should worry you. If he is trying to get seller finance as a way of paying no interest on the loan, then you should understand that you are losing that interest. You could be earning 10% interest on that money, the same 10% that he would be paying for a mortgage.
I can have easily gotten a bank mortgage but why would I pay high interest and use my own money when an owner is willing to finance at zero percent? So, it's not that all buyers can't get a loan or not qualified. Also, you're assuming that the buyer is a legal resident and can apply for a loan. 99% of all expats buyers are paying cash and not financing in the DR. The last thing I enjoy doing is dealing banks.