Real estate financing has become a new trend at the Costa Rican Real Estate sales circles. This term financing did not exist before. Just in matter of 10 years the tide has turned and more people are coming to buy the parcel of lands of the beaches of Costa Rica. Even the financial institutions that are US based are making loans on Costa Rica’s Real Estate and some other countries. The purpose of this article is to discuss the loans available for non-residents and ex-pat residents of Costa Rica. Here in this article financing programs will only by touched but will be educating the regular Real Estate buyers.Private mortgage brokers or Banking institutions are playing a major part in lending the finances for Real Estate in Costa Rica. Loans are available for many purposes, from private residences to rental property, from vacation homes for investment purposes to refinance monies to pay off personal debts. Every lending institution has its own terms for lending the finances. They all may have different terms applicable for interest rate, closing cost, term, rate speed and other numerous time tables and fees.
Let’s have a look at some of the financing plans that are provided to the resident buyers. These are as follows:
US dollars are only accepted for the private mortgages that are provided to the residents and non-residents. For personal residence, financing can be made up to 85% of the purchase price and for rental properties the percentage is 70%. The above rates are applicable for residents of Costa Rica only. For the non-residents, this rate is 70% for the personal residence whereas 60% for the second homes or rental properties. Duration of the loan term can go up to 30 years for residents of Costa Rica and 25 years for non-residents. The rates of interests are reviewed quarterly and are adjusted in accordance with the prime rate that is LIBOR index or New York prime rate.
If you planning to purchase an already existing home then you will be eligible for the following options:
1. 8.75% adjustable with a front end fee of 3.50% of the loan amount.
2. 9.00% fixed with a front end fee of 3.50% of the loan.
The fixed mortgage rate can change after the complete of their term based on the prime rate that is LIBOR index or New York prime rate whereas, the rate for adjustable mortgages can be modified quarterly based on LIBOR or New York prime rate. The rate will increase by 0.25% if your borrowing is more than $200,000.
IRA funds are another way of purchasing real estate that can be invested directly in land or home. You will have to adhere to the rules and regulations made by the US internal Revenue Service. Else, your financing procedure may be considered as illegal. The IRS approved companies are considered as administrator or the trustee of your finances so it has to be in accordance to the rules. Therefore, making it is a point that you only work with a company that has the permission to administer self-directed IRA accounts.
Developer financing programs are designed to achieve more than one objective and thus they are designed in a different manner. This gives more flexibility to the client as there will be no rejection from the developer and developer itself acts as a bank.
The Escrow services and good trust services are available for financial investment in the Costa Rican real estate property. A potential buyer should understand the need for a good accountant. A good accountant will always come up with the solutions for your financing issues such as verifying bank deposits, making financial statements etc. Costa Rica is seeing more buyers and the financing have become easier in the past 10 years. Hopefully in coming time it will go even better than now and you will be able to invest in the most famous Costa Rican Real Estate.