With the rise in real estate prices in Costa Rica, especially Guanacaste, financial institutions are broadening services to include real estate loans for non-residents in Costa Rica, enabling the purchase of land, condos, apartments and houses. The process is very simple: lenders will check credit history and financial situation, appraise the property, and if both are eligible, will deliver the loans. For a non-resident to star the loan process, first they must go to a financial institution that offers this service and speak with the loan manager. Afterwards, they will be asked to complete the necessary paperwork and to submit various forms of documentation, including a credit check authorization, and if accepted, they will go forward with the process. Most banks will charge a non-refundable fee for the credit check process, which can usually be around $100 or higher. This fee must be paid before the process can be started.
The typical loan profile is based on different criteria which includes: age limit of 65 years, have a payment/income ratio of 30%, excellent credit records and must be an American or Canadian resident. Most lenders in Costa Rica recquire a credit score above 680 points for non-residents to qualify for financing. Two very important documents will have to be submitted along with the passport: W2 forms for the previous 2 years and tax returns for last 2 years. These documents help establish the applicant's income situation. Other information necessary may include: bank references, bank statements for the last 6 months, construction plans and permits (if the loan is for construction), life insurance, fire insurance, credit check authorization form, and a title guaranty. Usually, the banks will lend up to 60% to 70% of the loan value on raw land and lots for as long as 10 to 15 years, and up to 70% to 80% of the loan value for a house, apartment or condo for as long as 20 to 30 years. Different terms apply to construction and commercial loans, including financing for pre-sales condominium projects.Interest rates on these types of loans to non-residents can start at about 7% and peak around 10%. To calculate the interest rate for non-resident loans, most financial institutions are adding 0.5% to 2% on top of the current United States' prime rate.
(Originally published by All Exclusive Realty News)
