Robert Chadwick, CEO of America Mortgages, and Donald Kilp, Co-founder of Global Mortgage Group, provided valuable insights in this webinar, which highlights the implications of U.S. mortgage trends, including the latest rate drops, market strategies, and investment opportunities. For those who couldn’t attend, the recording is now accessible here.
During the session, Robert Chadwick (RC) and Donald Kilp (DK) addressed a variety of inquiries, offering informative responses to help investors make informed decisions in the current market environment. Remarks have been edited for clarity and brevity.
1. What’s the likelihood of being pre-approved?
DK: Highly likely, depending on the loan program you’re seeking.
2. What is needed for the loan application? What documents should I have ready?
RC: To get a pre-approval for the loans, you’ll need your passport if you’re a foreign national. The biggest hurdle is usually the down payment for the property. For AML (Anti-Money Laundering) purposes, any money used in the transaction needs to have been in your account for a minimum of 60 days. The funds can be in a U.S. or overseas account. Once you submit all the necessary documents, your loan officer will review them along with the application, and you can receive a pre-approval in 24 hours.
3. Rates have come down but will they stay down?
DK: It’s uncertain, but it’s expected that rates will either stay flat or continue to go down over the next few years.
4. What would cause a loan application to be rejected?
RC: There are a few possibilities, such as insufficient credit for U.S. expats or a debt-to-income ratio that doesn’t work. However, American Mortgages has loan programs that can address these issues. Generally, it’s not about whether the loan qualifies or not, as they qualify 97% of their loans. The primary concern is whether the rental income covers the mortgage payment. If it doesn’t, it might just mean that you need to bring in a bit more cash.
5. What’s the most popular loan program America Mortgages offers?
RC: The “Rental Coverage Plus” loan program.
6. Which banks do you work with for the underwriting and disbursement?
RC: As of last December, we became a direct lender ourselves, which allows us to lend in our own name and gives us more control over our loan programs. For loans that do not qualify for our own lending, we have a variety of other options available.
7. Are the banks the same as for a U.S. resident?
DK: We don’t use traditional banks, even for U.S. citizens. Instead, we work with banks that understand the unique needs of foreign nationals and expats. This approach is particularly effective when dealing with foreign-earned income.
8. Can the loan commitment be less than 30 years?
RC: Absolutely. If you prefer, you can choose a 15-year term instead of the standard 30-year term. While most of our loans are 30-year fixed to provide safety and security, you’re free to pay off your loan faster, make double payments, or opt for a reduced 15-year term. However, if you’re qualifying based on rental income, shortening the amortization period might present some challenges, but it is entirely possible and acceptable.
9. How do we make sure what the rental price is?
RC: To ensure the rental price is accurate, we order a supplement alongside the appraisal or valuation of the property. This supplement provides the exact average rent for the specific property, which is the number we use to qualify the loan. This process not only protects the lender but also protects you by ensuring that the rental income you expect aligns with the actual market data, confirming what you’ve been told by your realtor.
10. Could you give us an example of the type of properties that will not be able to get financing?
RC: Difficult to finance properties include rural properties, mobile homes, manufactured homes, and co-ops.
11. Some investor loans that fall into the better financing deals have a 4-unit max.
RC: Generally, our standard loan offerings, especially those we provide ourselves, are for properties with one to four units, and we handle these every day. However, we also have loan programs available for properties with five to eight units. If you find a fantastic property within this range, we can provide a loan for up to 75% loan-to-value for properties with up to eight units.
12. Can I close my existing loan midway through the tenor and reset my rate?
RC: Yes, you can close your existing loan midway through the tenor and reset your rate, but be aware of the prepayment penalty that typically applies to investment properties. This penalty usually decreases each year. If interest rates go down, you can calculate the break-even point to determine if refinancing makes sense. Once the prepayment penalty period ends, you can refinance without any penalties, whether you want to switch to a shorter loan term, pay off the loan, or even take out a brand new loan and pull cash out.
13. What is the minimum down payment required to qualify for a loan?
RC: 25% for foreign nationals with no U.S. credit; 20% for U.S. expats.
Robert Chadwick, CEO of America Mortgages, and Donald Kilp, Co-founder of Global Mortgage Group, provided valuable insights in this webinar, which highlights the implications of U.S. mortgage trends, including the latest rate drops, market strategies, and investment opportunities. For those who couldn’t attend, the recording is now accessible here.
During the session, Robert Chadwick (RC) and Donald Kilp (DK) addressed a variety of inquiries, offering informative responses to help investors make informed decisions in the current market environment. Remarks have been edited for clarity and brevity.
