The client was referred to us by a private bank in Zurich. The client is a German company looking to expand to the U.S. and wanted to purchase a U.S. Headquarters. They struggled to look for financing as the source of repayment of the loan was based on the European company and foreign financials, which U.S. banks do not recognize or underwrite to.
How We Helped
We were able to secure a lender that underwrote to the foreign financials, based in Euros, and secured a 5-year interest-only Commercial Real Estate loan. Going forward the U.S. revenues will roll up to a U.S. tax return allowing for traditional bank financing in a few years.
America Mortgages (www.americamortgages.com) is Asia’s only overseas mortgage company with Direct Bank Programs for Foreign Nationals and Overseas Expat to purchase or refinance residential property in the U.S.
I am a Hong Kong citizen and what’s happening now is heart-breaking to watch unfold. Hong Kong’s cultural identity, fortitude, and integrity are all being tested, and regardless of whose side you are on, one thing cannot be disputed – Hong Kong is not the same as it once was.
Previous Migration Trends
Hong Kong is no stranger to phases of migration. Starting in 1967 and lasting almost 10 years, social instability was wide-spread, with riots all over the small island city. Many Hong Kong citizens moved to South East Asia, South Africa, and even as far away as South Africa. Towards the end of 1984, when the “Handover” to China from the U.K. was officially signed, it was the beginning of the largest outbound migration Hong Kong has ever seen. At the time, the U.K. government did not offer passports to those born in Hong Kong as it once did. Then just a few years after, in 1989, the Tiananmen Square event happened, and Hong Kong citizens migrated en-masse, primarily to Commonwealth countries such as Canada, Australia, and New Zealand and, to a lesser extent, the U.S.
The Numbers Were Staggering!
Some estimate total emigration was up to 1 million during this period, with the peak between 1988 – 1994 at 330,000. That is about 20% of the entire population of Hong Kong in the 90s! Other research shows that an estimated US$4.2billion of outbound investment flowed to Canada during this period.
Why Is This Time Different?
What is different this time around is that back then, the “Handover” was relatively uneventful, and most Hong Kong-born emigrants returned home, a phenomenon known as “香港回流潮” or Hong Kong Returning Tidal Flow.
Fast-forward 20 years to today, and the landscape is very different. Every conversation with friends, colleagues, and family, Every news channel, Every newspaper – it all revolves around the protests. Hong Kong is emotional, it’s tense, and its energy is visceral. We now have a small glimpse into what the future may be like, and it’s different from the landscape during the Handover.
Folks Are Looking To Move!
Hong Kong has the most expensive property prices globally, and the market has increased consistently for 30 years with a few pullbacks – Asian Currency Crisis 1997, SARS 2003, G.F.C. 2008, to name a few. Meanwhile, the H.K.D. is pegged to the USD, so being able to cash out your Hong Kong property to purchase homes in the U.S. is starting to make a lot of sense. It’s already happening.
Year
Number of P.R.’s Issued to H.K. Citizens
2016
1,360
2017
1,360
2018
1,525
Other Destinations
Canada issued permanent residency for Hong Kong Citizens:
– San Francisco: home prices fall first time in 7 years
– Manhattan: Slowest 1Q sales since 2008
– Vancouver: down 9.6% from its peak in June 2018
– London: down 20% from its peak in 2014
– Sydney: down 15% from the peak in July 2017
Case Study: U.S.A.
The reasons why the U.S. attracts the most Foreign Purchases of Investment Property:
– Education – “Something for Everyone” Most universities in the world. The U.S. has approximately 5,300 colleges and universities in the world vs. 2,600 globally. That is a staggering 20% of all colleges and universities in the world!
– Evidence Supported Top Foreign Buyers in the U.S. in 2019: China $13.4bn Top Destination (more below): Florida (20%); California (12%); Texas (10%), Arizona (5%), New Jersey (4%)
Here is just a small sample in (no particular order):
Location
Rental Yield
Home Value Increase
Arlington, Texas
7.5%
10.3%
Columbus, Ohio
7.9%
9.2%
Las Vegas, Nevada
5.3%
15.9%
San Antonio, Texas
6.4%
8%
Orlando, Florida
5.7%
10.7%
** Did you know Orlando is the most searched city in America for Chinese real estate investors?
Since June 15, 2019, America Mortgages has seen a steady increase in loan inquiries from Hong Kong, with about 70% of them in the process of an actual home purchase!
Location
Enquiries
Loan Processing
U.S.
12
10
U.K.
8
5
Canada
8
7
Australia
6
3
Japan
6
4
Hong Kong is an amazing city, and it has provided so much, for so many, for so long.
However, Hong Kong, just like any other country, is not immune to domestic turmoil, and you have to wonder if this current Migration Wave is different from the others?
“There is nothing wrong with being prudent and diversifying your investments aboard.”America Mortgages Partners
America Mortgages has bank loan programs that are easy to qualify for. We can close loans in 30 days with many loan programs not requiring any income proof or the need to leave Hong Kong. Overseas Expats and Foreign Nationals to Purchase or Refinance.
Principal refers to the initial mortgage amount taken against the property you mortgaged. When you obtain a mortgage, it comes in two parts — principal and interest. The principal is the amount that you borrow from the lender, and the interest is a percentage of that principal amount charged by the lender as the cost of borrowing that money. When repaying, you have to pay both the principal and the interest.
For example: if you borrow $300,000 from a lender to buy a house, the principal of your loan is $300,000. At a 3% of annual interest rate, it will add $750 of interest balance per month to the principal balance. If you repay $10,000 as a monthly installment, the lender will cut off $750 as interest, and the rest $9,250 will pay off the principal balance. So, after one month, your loan principal will be 290,750. With each monthly installment, the principal balance will be reduced.
If you find it difficult to calculate the balance principal, interest percentage, and other fees, check the loan’s monthly statement. Our lenders will provide you a breakdown of all the numbers. It will show how much of the monthly installment goes toward paying off the principal balance and interest.
A bigger loan comes with a bigger interest rate. One way to avoid paying extra money is to pay off the loan faster by making additional payments with every monthly installment. Doing so in the case of adjustable-rate mortgages will save you plenty of money.
With America Mortgages, you can get anything between $150,000 and $5,000,000 and a choice from various paying off options.
A U.S. Expat living in Hong Kong working in the IT field. He wanted to refinance his 4-bedroom Tempe, Arizona home, which used to be the family’s residence and is now used as a short-term rental so the family can use it over the summer school holidays.
How We Helped
The client was working for a global company. He was currently on his U.S. tax filings, but his income was foreign-earned, no “normal” payslip, no U.S. bank account, and no W2.
Once we had all the required documentation settled, we packaged the loan and shopped for the best rate and terms. Our mortgage specialists helped the client structure several letters of explanation regarding how his income was calculated and the use of the rental property (Airbnb).
A formal mortgage offer was received within ten working days and closed shortly after that. The client was able to lower his current interest rate by a full percent on a 30-year fixed savings of thousands of dollars in long-term financing costs.
A pre-approval denotes an official letter from the mortgage lender outlining the maximum mortgage amount they are willing to lend you. It’s not a commitment but only a rough estimate of the loan that you may borrow from that organization, the possible interest rate, and the monthly installment figure.
You can get the pre-approval document by filling up a loan application. The lender will ask you to submit some paperwork, including pay stubs, credit check, bank account statements, tax returns, and W-2 statements. An officer will look into the information provided and give you a written statement detailing the mortgage amount you are qualified to borrow.
A pre-approval does not guarantee the approval of a loan. It just means that the lending company has looked into your assets and other aspects of finances and chalked out the sum of a loan against that credit history.
At America Mortgages, we approve over 97% of all applications. Some of our loan programs don’t even require verifying the applicant’s income! Mortgage pre-approvals have an expiry duration, ranging between 30 and 90 days, depending on the lending company. Meaning, you will need to find a home and apply for the loan within that expiry window. Upon the pre-approval document’s expiration, you will need to apply for a new one that may affect your credit score a bit.
A pre-approval solidifies your financial stability and seriousness to the house seller. You can stand ahead of other potential buyers in a competitive market. This will particularly help first-time homebuyers to convince the seller that they are ready to put in an offer. Some people confuse between pre-approval and prequalification. However, the latter does not have much credibility since it does not involve a thorough investigation into your incomes and credit score.
A Family Office based in Singapore has been actively shopping for yielding assets in the U.S. Given the recent weakness in San Francisco, the Family Office bought the building at 27% below the peak of 2019.
How We Helped
The borrower was an overseas company with no U.S. footprint and could not find any lenders willing to underwrite the loan. The lead came from a private bank that referred us to the client.
High Net Worth investors require a level of sophistication and professionalism which is why so many private banks are comfortable with us handling their clients.
We were able to secure a 5-year term with 25-year amortization with one of our lending partners that underwrote solely to the stabilized property. The borrower will now be able to generate a U.S. net worth which will open up further financing options for their next property.
An existing client referred this client, and he reached out to us to enquire about our U.S. citizen mortgage programs as he thought we only offer Foreign National mortgages.
How We Helped
How surprised he was to hear that U.S. Expat loans are half of our business. Since we are Expats ourselves, we know the exact issues our clients face and have a roadmap on dealing with them – Non-U.S. income, weak FICO score, and so on.
A documentation loan is any loan that requires full information substantiating a borrower’s claims of income and assets to gain financing. The vast majority of loans are documentation loans. Lenders use the documents provided during the underwriting process to ensure the application for financing is accurate and further determine a loan’s contract’s terms. “No doc” loans, in contrast, require no verification. No doc loans are also known as “high risk” loans, and they may even violate standard lending principles. Therefore, it is best to attain a documentation loan when possible by providing necessary loan information.
Income Verification
The first thing you will need to supply a lender to prove you can afford a loan is the verification of your income. There are several ways to verify income, and each lender may have specific requirements. One option that works for most lenders is supplying at least two years of tax information. For example, submit copies of the past two years’ worth of W-2 statements, which record your official income. If you are self-employed, you will need to supply Schedule C statements instead.
Lenders may also accept paycheck stubs or verification of income from your employer. However, many lenders would like to see that you have been earning an income equal to your current level for at least two years. The best scenario is to show continued employment for two years with the same employer with an increasing income.
Asset Verification
Lenders will consider your assets when reviewing your full financial strength. Not all lenders need to know your “net worth” to extend your loan. However, if you are placing any collateral down on a loan, you will need to verify the value of that collateral through full documentation. For example, if you take out a home equity loan, the lender may require an up-to-date home appraisal and a statement from your primary lender. The primary lender’s statement will reflect how much equity you have earned in the home through paying down your mortgage. This tells the second lender just how much it can expect to recover if you were ever to default on the loan and the lender needed to seize your asset.
Liens and Liabilities
Lenders cannot count your assets alone in order to determine your financial stability. Your debts, liens, and liabilities will also be taken into account. For example, when you apply for a mortgage, your mortgage lender will need to know if you also owe money to a student loan lender and a car loan lender.
This can affect your ability to afford a new loan based on your current income. Liabilities can be found through a simple credit check. Your credit report will reflect all of your debts and liens against your property. A credit check is completed without any documentation from you. All you will need to supply is your Social Security, Tax Payer Identification, or Credit Report number. The lender will carry out the credit check with your approval.
Low or No Documentation Loan
A low or no documentation loan requires very little verification of the claims made on an application. Documentation loans require a borrower to submit proof of income, proof of assets, and other documents before having a loan move through the underwriting process. A no or low documentation loan requires none of these items. Instead, the borrower must place only enough money as a down payment (30% min) to receive the loan. In exchange for the relative ease of the lending process, the borrower may have to accept higher interest rates and financing charges as well as a lower loan-to-value ratio on an asset.
America Mortgages specialize in Non-U.S. Citizens and Expats looking to purchase or refinance U.S. Real Estate. All the programs listed above may be available depending on your situation. With over 11 languages/dialects and representation throughout Asia, Australia, and Europe, one of our experienced professionals will be able to find the right loan for your borrowing ability.
A self-employed real estate investor with a British passport living in Hong Kong. He owned and managed a small boutique investment firm and wanted to diversify his holding in U.S. real estate.
How We Helped
A self-employed real estate investor with a British passport living in Hong Kong. He owned and managed a small boutique investment firm and wanted to diversify his holding in U.S. real estate.
The client needed to raise capital to purchase the three-unit property. To raise the money, the client wanted to refinance/cash out their existing 4 bedroom beachfront rental property lowering their current rate for a 5 year ARM, which was maturing in 6 months and get into a lower rate fixed mortgage.
The main challenge we had with this case was that the client had a complicated income stream. The business’s income was extremely “lumpy,” and although the total earned income was high, the consistency was sporadic. This made the accounts challenging to interpret and, in turn, created a three month dragged out mortgage experience with a well-known international bank for it to be declined eventually.
Although the clients’ business was very niche in his field, he had been running this successful firm for over a decade with an exceedingly good accounts track record. We were able to highlight the stable business history to the lender and structure the income documentation clearly and precisely to satisfy the lender. The lender subsequently released the equity portion from their other property and approved the loan on their new purchase.
Loan Details
Nationality
Property Value
Loan Amount
LTV
Rate
U.K. Citizen
$950,000
$475,000
50%
4.875%
Term
Address
Property Type
Purpose
Loan Type
5/1 ARM
Seattle, Washington
Single-Family Home
Refinance
Residential
America Mortgages Inc. is a mortgage broker focusing only on U.S. Expats and Foreign Nationals living overseas. We offer over 150 U.S. bank and lender programs direct to our international clients. America Mortgages is wholly-owned by Global Mortgage Group Pte. Ltd. an international mortgage specialist based in Singapore.
