These days it’s a lot more common for US citizens to be living and working overseas; if this applies to you it doesn’t mean that you will never want to purchase property at home. You may be looking to have somewhere to stay if you return to the country to visit, or you may be looking for a property that you can use as an investment now with the potential to use it as your home if you come back to live in the country permanently.
Whatever your reason for wanting to purchase a property you may want to secure a home loan in order to do so. The questions is, are you able to do this and how easy will you find the process?
The question of tax
A home loan provider will often use an applicant’s tax details for the previous two years when reaching a decision on a home loan application. This may be a problem if you are living and working overseas; it really depends on your circumstances. Many US citizens will be located in a different country but be working for a US based company. If you are in this situation then it’s likely you will still be paying tax to the IRS.
You will therefore have a record of your income which can be used in the home loan application process. If you are settled overseas, and working for a foreign employer, then you are going to experience difficulties. You are probably going to be paying tax in your country of residence and you are aren’t going to have the same level of proof to give to a lender. In this case it’s going to be difficult for you to get a home loan from a US based lender. You can read more about fixed rate home loans on the NPBS website – how they can help you & your family.
The question of credit
Another potential issue, if you’re residing overseas, is that you may not have a credit history in the US. If you’ve been away from the country for many years this is likely to be the case. Home loan providers use credit reports in the loan decision process so if you haven’t got any credit history this is going to count against you. There is no way for the lender to see how reliable you are in making payments.
How do overseas investors do it?
It’s not impossible for an overseas investor to secure a loan from a US financial institution but they usually have cash available to at least pay for the majority of their purchase, or they have been financed in their home country. If you aren’t paying taxes to the IRS then you’re likely to be treated similarly to one of these investors and it’s going to be very difficult for you to get a loan from a US based provider. Your best option is to seek financial advice from a professional who will help you to explore what options may be available to you.
My boyfriend just got back from working in Europe for 6 months. The company he was working for was based in Ireland, and he’s having the toughest time just getting his unemployment benefits now that he’s home.
While reading this blog, I was reminded of a conversation between me and one of my friends who lives abroad. He was telling me the horror story. When he wanted to have a mortgage, he found out his entire credit history was wiped out as he was living abroad. He asked for way out but I had none. Shared this personal experience here so that people can kow the problem and may help me out so that I can help my friend in turn.
There may also be other options available. If it’s difficult to obtain a loan in the U.S., you may be able to apply for a loan in the country that you’re an expat in. You may even be able to get a better rate than you would at U.S. banks. For example, home loan rates in developed Asian markets such as Singapore and Japan, as well as those in some European countries, are lower than their U.S. counterparts and may be able to offer a loan to buy property internationally. If you hold stocks, taking out a margin loan is also an option.
This was an interesting read for me, especially because lately I have been thinking more about the prospects of travelling abroad and perhaps even living overseas for extended periods of time. So many of my friends and now even family, have been moving around lately and though not all overseas, it really has opened my eyes to the idea of living life away from what I have already become comfortable with. I’m glad I randomly came across this because it brought me to realize more than before, how important it is to plan these sorts of things out before getting too involved.