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Mexican Financing: Commonly Asked Questions,
Costs |
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- Why do I have to pay so much money
upfront?
Because the costs are much higher than in
the US, the upfront costs are proportionally
higher as well. A loan in Mexico takes, on
average, about three times more work and
there are a number of parties involved, each
wanting some deposit for their services.
- I would like to pay my own insurance,
can I do this?
Yes you may, however, you also will be
required to pay a small amount of property
replacement insurance to the lender each
month. Because the laws in Mexico are
different, the lender will require you to
pay a small fee for additional insurance
each month.
- What can I expect my costs to be?
The costs associated in acquiring a property
in Mexico are very high compared to the
US. Even if you are paying cash for the
property you will still need the services of
the Notario as well as be responsible for
the transfer tax, which is usually 2% of the
purchase price. Additionally, you will have
to obtain an SRE permit and RNIE
registration. You can expect your closing
costs on a financed home to be between 6%-8%
of the purchase price. That said, you must
also remember you would be getting 3 times
more home for the same price as you would be
paying for the same property in the US.
- Is life insurance offered with this
program?
Yes, unlike in the US where whoever is
on title to the property assumes the loan
and makes the payments, a property in Mexico
is held in a Bank Trust. If the qualifying
borrowers and beneficiaries of the trust
were to pass away, new
beneficiaries of the property would have to
re-qualify for the loan. The new beneficiary
has 30 days from the time they are on the
new trust to re-qualify for the loan. If
they do not re-qualify, the property would go
into foreclosure. In this instance, the
lender would sell the property at auction,
pay off the lien on the bank trust and
refund the new beneficiary the difference
between the payoff of the bank trust plus
all closing costs and the new proceeds from
the auction. For this reason life insurance
for the mortgage is offered for most
applicants, however you may also purchase
your own policy if you want. The lender
offered policy is an option, not a
requirement. In fact, no mortgage life
insurance is required at all. The current
cost for the mortgage life insurance, if you
qualify, is .32799% of the loan amount per
year or $27.33 per month per $100,000
borrowed.
- Why do I need to pay for two
appraisals?
The first one is to determine value for the
lender. The second is required by the state
where
the property is located to determine tax
value.
- What can I expect for property taxes
in Mexico?
Taxes in Mexico are very inexpensive. On a
$500,000 property for instance you can
expect to pay about $50-$70 a month in
taxes. For specific information on the taxes
in your area it is best to speak with a
realtor in your desired area.
- Do I need an attorney?
Although not required, an attorney
specializing in real estate may be a good
idea. Because realtors are not licensed in
Mexico and there is no agency regulating
them or your purchase contract, you may wish
to obtain the advice of counsel prior to
signing any documents or turning over any
funds. If you choose to hire an attorney
and would like them to look over your
mortgage documents, Marquest would be happy
to provide them to anyone you authorize.
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