Taking the “Pain” out of High Net Worth mortgages for U.S. Real Estate, without AUM requirements.

Mortgages for U.S. Real Estate

With inexpensive funding and various tax advantages, everyone should take advantage of the benefits of a mortgage when investing in U.S. real estate regardless of the loan size. However, why do the wealthy often find it increasingly difficult to obtain mortgage financing without AUM?

With a portfolio of assets worth millions of dollars, one may assume that securing credit would be a straightforward task for a high net worth (HNW) individual. Unfortunately, the reality can be quite different especially if you’re a foreign national or U.S. Expat.

The unique nature of a HNW’s wealth – their income, investments, and liquidity – puts this group of people at a surprisingly high risk of being turned away by conventional banks unless they are willing to deposit a significant amount of funds for the bank to manage. This is certainly true in the mortgage market, and what’s more, it is an issue that has become more prevalent post-Covid.

American Mortgages has a dedicated HNW Team that focuses on mortgage solutions for foreign nationals and U.S. expatriate clients.

“As a company, our focus is finding solutions that go beyond what Private Banks can offer was the cornerstone of why this has been so successful. Our goal is to be a viable solutions provider and a trusted partner for the private banks and their clients. None of our loans require AUM, hence there are no funds taken away from their current investments or portfolio.”

– Robert Chadwick, co-founder of Global Mortgage Group and America Mortgages.

America Mortgages HNW mortgage loans have a multitude of options when it comes to qualifying for a large mortgage loans regardless of the passport you hold.

1. Asset Depletion – a surprisingly simple way to establish your income. AM Liquid Portfolio uses a unique view on “asset depletion” to qualify HNW clients using their investment portfolio without an encumbrance or pledge of assets. Essentially, all of your assets are entered into a calculation, and a final number is churned out. The final number is then used as the income to qualify. In most cases, as long as the income is sufficient, no other person’s income documentation is required. This makes an often complicated and tedious process simple, transparent, and painless.

2. Debt Service Coverage – When it comes to HNW borrowers, one of the most overlooked and misunderstood loan programs is debt service coverage. HNW borrowers tend to own multiple properties in various asset classes. If the property is used as a rental, then there may not be any requirement to go through the tedious process of providing and verifying personal income. Again, as HNW borrowers tend to have very complicated tax returns, this is a straightforward way to show the borrower’s debt serviceability.

Debt service coverage ratio– or DSCR – is a metric that measures the borrower’s ability to service or repay the annual debt service compared to the amount of net operating income (NOI) the property generates. DSCR indicates whether a property is generating enough income to pay the mortgage. For real estate investors, lenders use the debt service coverage ratio as a measurement to determine the maximum loan amount.

3. Bridge/Asset Based Lending – With Covid still in play, it’s not uncommon for investors to experience a temporary liquidity event. Rather than selling their property, they are using their real estate to release equity. Asset-based lending is an option for both residential (non-owner-occupied) and commercial properties.

Simply stated, HNW bridge loans are used for residential and commercial investment property when more traditional institutional financing sources may not be available. Due to temporary liquidity, many borrowers have capital needs that traditional sources often can’t meet. For example, a borrower purchases property out of bankruptcy or foreclosure and needs to close quickly “same as cash” before long term financing can be arrange.

4. Simplified Income – HNW borrowers often have personal and business tax returns, which are complicated. The complexity of these returns often turns into an administrative nightmare for the borrower when dealing with a mortgage lender. What makes America Mortgages unique is the fact that 100% of our clients are living and working outside of the U.S. We are dealing with HNW clients from Shanghai to Sydney. Simply put, translations and understanding tax codes, deductions, net income, etc., is painful.

America Mortgages HNW Simplified Income documentation is just that. We do not require years or, in some cases, decades of tax returns, P&L, A&L, bank statements, etc. We take an often complicated process and simplify it; 1. If you’re self-employed, we will request a letter from your accountant stating the last two years’ income and current YTD. 2. If you’re employed, then a letter from your employer on company letterhead stating your last two years’ income and current YTD is sufficient. Yes, it’s that simple and painless.

As 100% of our clients are either Foreign Nationals or U.S. Expats, we understand the intricacies and complexities of this type of lending for our borrowers. It’s as simple as that. Our HNW loan programs are structured to meet our client’s requirements. Providing competitive pricing with the assurance that your loan will close is our only focus, and no one does it better.

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Cash-Out Equity Release. Is now the time?

Cash-Out Equity Release - America Mortgages

There’s something about having cash on hand that feels empowering. Being able to invest in projects, equities, crypto, or a business opens up endless possibilities. It could be to pay off high-interest debt or taking the family on a dream vacation before the children get too old. We hear this daily when speaking to clients that are considering cash-out refinancing.

What is a cash-out refinance?

A cash-out refinance is a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some additional liquidity. You get the difference between the old mortgage and the new and the money can be used however you like. The amount received depends on the equity built up in your property.

How does it work?

Cash-out refinancing depends on several factors which include the value of the property, the amount owed, and how much you can qualify to borrow. Your America Mortgages loan officer can help you determine if this type of financing makes sense from a cost basis.

The potential benefits of a cash-out refinance

  • 1. A lower interest rate on your mortgage – Let’s say you bought your home when mortgage rates were much higher. Refinancing your home can improve your financial situation if you are able to obtain a lower rate.
  • 2. Debt consolidation – The money from a cash-out refinance can be used to pay off other high-interest debts, like credit cards and college loans. This could save you thousands in interest in the long run.
  • 3. Credit score improvement – Building on the previous point, paying your credit card debts off in full using a cash-out refinance can build your credit score by reducing your credit utilization ratio.
  • 4. Tax deductions – If you’re looking to improve your home using the cash from a cash-out refinance, you could potentially qualify for mortgage interest deduction.
  • 5. A cheaper way of paying for your kid’s education – It’s every parent’s dream to be able to put their kids through college, but high-interest student loans can be extremely stressful. Using a cash-out refinance can be a good alternative if the rates are lower.
  • 6. Inheritance – Although we advise you to speak with your attorney or tax advisor, it may be possible to reduce the amount of inheritance tax when estate planning with increased leverage.
  • 7. Take advantage of an opportunity – With the current situation with Covid, there are a lot of opportunities that may not be available once the world goes back to “normal”. Having access to liquidity and being able to act immediately can be potentially life-changing.

So, should you do it?

The truth is, cash-out refinancing can be a good way to improve your financial situation – we think of it as an affordable way to borrow money if you own substantial equity in your home. The money from a cash-out refinancing can even be used to rebuild equity that you’re taking out if you decide to use it on value-adding home renovations.

Interested in cash-out refinancing? America Mortgages has a 97% approval rate for both U.S. Citizens & Foreign Nationals. That is our sole focus and our expertise.

For more details please visit us at www.americamortgages.com