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Financing Mexican Properties for American and Canadian Dreamers
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BENEFITS

BENEFITS TO FINANCING YOUR MEXICO PROPERTY

Only a short time ago, foreign buyers did not have the luxury of financing their Mexico real estate and therefore had to purchase their home with 100% cash. Through the development and maturation of cross-border Mexico home mortgages from ConfiCasa Mortgage International, foreign buyers now have many affordable loan program options available to purchase properties in Mexico. Financing your Mexico property purchase allows for many immediate and long-term benefits, including:

  • SIGNIFICANT FINANCIAL FLEXABILITY. With Mexico mortgages as low as 20% down, higher priced premier properties are now within your reach.¬† In addition, your cash is freed up to spend more time in your Mexico dream property or perhaps even purchase additional Mexico real estate.
  • DEDUCTIBLE MORTGAGE INTEREST. According to IRS Publication 936, mortgage interest paid on a primary or second home is tax deductible in the U.S. up to $1 million ($500,000 if married filing separately). The Publication language does not specify whether the home must be located in the U.S., which enables those deductions to be applied to your financed Mexico Property1.
BENEFITS TO FINANCING YOUR PROPERTY THROUGH CONFICASA

PROFESSIONAL GUIDANCE. In addition to financial flexibility, financing through ConfiCasa Mortgage International provides you with a trusted professional advisor who will look out for your best interest, ensuring your purchase is executed in accordance with the Mexican law. While purchasing Mexico real estate is now safe, some developers may try to avoid the complete (and sometimes lengthy) process which may prohibit you from purchasing your Mexico real estate in accordance with Mexico Law.

HISTORY OF PURCHASING

OWNING A MEXICO PROPERTY IS NOW SAFER THAN EVER BEFORE

An important piece of Mexico‚Äôs history includes the restrictions once placed on foreign land ownership that was incorporated into the Federal Constitution of 1917. Prior to the changing of the Mexican constitution in 1994, foreigners could not acquire direct ownership of real estate property in the ‚Äúrestricted zone‚ÄĚ of Mexico (the restricted zone encompassed a massive area that spanned approximately 62 miles from each of Mexico‚Äôs borders and within 31 miles from each of its coasts, which included the entire Baja California).

After the establishment of the North American Free Trade Agreement, the Mexican government realized that the country would significantly benefit from foreign real estate investments within the restricted zone. To facilitate such investments, the government amended the Constitution in 1994 and created the Fideicomiso.


FIDEICOMISO

A Fideicomiso is a bank trust which provides a vehicle for foreigners to acquire ownership of Mexican properties within the restricted zone and with the same rights as a fee simple owner in the U.S. and Canada. To obtain a Fideicomiso, you must appoint a Mexican Bank (Fiduciario) to execute the purchase of your home on your behalf. When you obtain a Mexico home mortgage from ConfiCasa Mortgage International, we work directly with the Fiduciario to ensure the smoothest process in executing the Fideicomiso for your property.


NOTARIO PUBLICO

ConfiCasa Mortgage International works closely with federally appointed Notario P√ļblicos on all closings. Notario P√ļblicos are specialized attorneys who act on behalf of Mexico‚Äôs state and federal government to verify and certify legal documents that require authenticity. All legal documents (not just real estate) must be made before a Notario P√ļblico in order to be valid. In addition, the Notario P√ļblico is also responsible for the secure storage of original records and documents.


TITLE INSURANCE

The most important concern of a foreign investor is gaining clear and valid title to the property. With the more recent implementation of U.S. title insurance and financing standards in Mexico, legal ownership of Mexico property is no longer a risk. Although title insurance is not required for cash purchases and some financed purchases (depending on the lender used), it is strongly recommended by most reputable developers, realtors and lenders, including ConfiCasa Mortgage International. While the Notario P√ļblico is well qualified and legally authorized to execute the transaction, he/she does not provide any guarantee or bear any financial responsibility to the purchases in the event of a defective title.

 

ESCROW SERVICES

Along with the recent entry of title insurance companies, escrow services are also now offered by the title insurance companies, through their escrow departments. As in the U.S. and Canada, escrow services provide buyers with the additional safety that is necessary in a real estate transaction. Specifically, escrow services offer a reputable and independent third-party to hold transaction money in individually numbered and insured escrow accounts until all matters and items required for closing are completed and the property rights have been legally transferred to the buyer. These services are extremely important to the process to ensure a safe transaction. Although escrow services are not required for cash purchases, they are strongly recommended by most reputable developers, realtors and lenders and required for all financing transactions through ConfiCasa Mortgage International.

LOAN PROCESS

CONFICASA'S LOAN PROGRAM PROCESS MAKES FOR A SMOOTH AND LEGALLLY SOUND EXPERIENCE

With over 10 years of experience as the pioneer in providing cross-border Mexico mortgages to Americans and Canadians purchasing Mexico real estates, we thoroughly understand how to navigate you through the uncharted waters of the Mexico mortgage financing process. We have worked diligently to make sure that our process is the most effective and efficient. Through well-trained ConfiCasa Mortgage International Loan Officers, easy-to-use documents and forms, and an easy-to-navigate set of instructions, ConfiCasa Mortgage International has created a process that is well-detailed yet easy to understand. From start to finish, we will prove how easy it is to obtain affordable Mexico mortgage financing solutions for your Mexico real estate.

There are four steps to the ConfiCasa loan process:

STEP 1:         PRE-QUALIFICATION / PRE APPROVAL
STEP 2:         LOAN ORIGINATION & DOCUMENT SUBMISSION
STEP 3:         PROCESSING AND OBTAINING LOAN COMMITMENT
STEP 4:         LOAN CLOSING AND FUNDING

 

STEP ONE: PRE-QUALIFICATION/ PRE-APPROVAL

Pre-Qualification/Pre-Approval is necessary to determine up front, whether you will qualify for one of ConfiCasa Mortgage International’s Premier Loan Programs. To determine a pre-qualification up front, we will need you to fill out, sign and mail, fax, or email our short pre qualification form to your highly qualified ConfiCasa Mortgage International Loan Officer.

Upon receipt, your completed and submitted pre qualification form will be reviewed, and a credit report will be obtained. If you qualify based on your credit score verification and the information provided on your short pre qualification form, your respective ConfiCasa Mortgage International Loan Officer will provide you with a Pre-Approval letter. If you do not initially qualify, your Loan Officer will communicate to you any additional information needed in order to work towards provided you with a Pre-Approval Letter.

 

STEP TWO: LOAN ORIGINATION & DOCUMENTSUBMISSION

After you have received your Pre-Approval Letter, your ConfiCasa Mortgage International Loan Officer will provide you with a Loan Origination Package. The Loan Origination Package consists of an easy-to-navigate set of instructions and easy-to-use documents and forms that are necessary for a borrower to complete and submit in order to successfully execute Part 3 and Part 4 of ConfiCasa’s Loan Process. In order to provide you with a binding loan commitment and close and fund your Mexico mortgage loan, each borrower must provide a completed Loan Origination Package

Your respective ConfiCasa Mortgage International Loan Officer will be readily available to guide you through any of your questions as you complete your Loan Origination Package. In addition, he/she will review your completed Loan Origination Package for completion and accuracy and work with you to finalize any missing or incomplete documents in a timely manner.

 

STEP THREE: PROCESSING ANDOBTAINING LOAN COMMITMENT

After receipt of your completed Loan Origination Package, your package will be sent to our in-house Processing Department and will be reviewed within three business days from the day it was received. With years of experience in working with our lender partners, the ConfiCasa Mortgage International Processing Department is able to review your loan file to determine whether any conditions or additional requests need to be met (for potential items not already requested in the Loan Origination Package). If additional information is needed, our Processing Department will notify you and your Loan Officer with a request for such conditions and/or additional information. If no additional information is needed, your Mexico mortgage loan will be fully processed and submitted to the appropriate lender partner for Mexico mortgage underwriting.

While our Processing Department is usually able to identify any conditions or additional information needed to underwrite your file, there are occasional situations where this is not possible, and our lender partner will request conditions or additional information. If this occurs, our Processing Department will notify you and your Loan Officer with a request for our lender partner’s conditions and/or additional information. If no conditions or additional information is requested by our lender partner, a binding loan commitment and loan closing package will be sent to you by ConfiCasa Mortgage International’s Closing Department. Our average turnaround time for loan submission to obtaining a loan commitment or conditions is 10 business days, but does vary by lender, Mexico mortgage loan program and specific file. With our Premier VI Exclusive Loan Program, this time is typically reduced to an amazingly quick 5 business days.

 

STEP FOUR: LOAN CLOSING AND FUNDING

A smooth closing starts at the time of Loan Origination (Document Submission). Included in the Loan Origination Package is the loan origination document request list. This list, which includes all of the items your Loan Officer needs from you to successfully underwrite and close your Mexico mortgage home loan is somewhat long, and some of the items may appear a bit impractical when compared to the ease of obtaining a loan in the U.S. or Canada. However, each of these items has a purpose and most are requirements of the Mexican bureaucracy.

Once your loan is successfully underwritten, you will receive a loan commitment letter from ConfiCasa’s lender partner, and a Closing Process Introduction Letter from our Closing Department. The Closing Process Introduction Letter introduces you to the ConfiCasa Closing Department Team as well as outlines the complete closing process. At this time ConfiCasa will appoint its closing agent partner to your loan. Note that during this period ConfiCasa is already working to approve your property for closing.

 

PURCHASING FEES

CLARIFYING PURCHASING COSTS FOR CASH TRANSACTIONS VERSUS FINANCING TRANSACTIONS

Before entering into a cross-border purchase of Mexico real estate using cash or Mexico mortgage financing, it is important to understand the transaction costs that will be incurred. This includes understanding the purchasing costs for a cash transaction as compared to a financed transaction; a topic that is often misunderstood. In order for you to fully understand the costs for any cross-border Mexico real estate purchase, below, we disclose and break out each fee associated with purchasing a Mexican property and disclose whether the cost is incurred for cash transactions and/or for financed transactions. You will notice that many of the fees associated with the purchase of your cross-border Mexico property are standard purchasing fees that would result regardless of whether the purchase is financed or facilitated with 100% cash. All fees listed below are in U.S. Dollars.

 

PURCHASING COSTS INCURRED REGARDLESS OF WHETHER YOUR TRANSACTIONS IS FINANCED
  • FIDEICOMISO (TRUST) FEES
    The Fideicomiso (trust) is the legal instrument (like a living trust) that allows foreigners to own property in the federal restricted zone. These fees are incurred regardless of whether the purchase is transacted with cash or financing.

    • Initial Setup Fee: Ranges from $500 to $700 depending on Fiduciario (trust bank) used
    • First Year's Fee: Ranges from $500 to $700 depending on Fiduciario (trust bank) used
    • Perpetual Annual Fee: Ranges from $500 to $700 depending on Fiduciario (trust bank) used
    • Registration fees of the Fideicomiso: Ranges from 0.30% - 0.50% (of the purchase price) depending on region
  • NOTARIO PUBLICOS FEES
    Fees for ConfiCasa Mortgage International‚Äôs select Notario P√ļblicos typically range from $1,500 -$2,500, with each Notario charging different fees. We use a select number of Notarios who we have established strong relationships and know will perform to our expectations, as well as charge at the lower end of the range across Mexico. It is important to note that ConfiCasa Mortgage International does not select Notarios solely based on the lowest cost, due to the quality service standards we wish to uphold. Instead, we balance execution and performance with cost.
  • PERMITS / MUNICIPAL FEES:

    • SRE Permit Fee:
      These fees range depending on the area your Mexico real estate is located and the individual used to obtain the SRE Permit. These fees are typically $1,200 but may vary slightly.
    • RNIE Foreign Investment Permit Fee:
      These fees range depending on the area your Mexico real estate is located and the individual used to obtain the SRE Permit. These fees are typically $500 but may vary slightly.
  • CERTIFICATE FEES:

    • Certificate of No Liens Fee
    • Certificate of No Tax Debt Fee
    • Certificate of No Water Debt Fee
    • No Debt / Municipal and State Fee

      Each of these fees vary, however, all of these fees in aggregate equal approximately $100 - $150 and may vary slightly.
  • TAX APPRAISAL (AVALUO CATASTRAL) FEE:
    An Avaluo Catastral or Tax Appraisal is required by the local county’s municipality in order to determine an accurate property tax base. This is required for all cash and financing transactions. The fee for this appraisal is approximately 0.18% of the total purchase price.
  • ACQUISITION TAX (OR TRANSFER TAX)
    All Mexico real estate that is transferred, sold, donated, subdivided, merged with another property, or placed in trust (regardless of whether it is purchased with cash or with a Mexican mortgage home loan), is subject to an Acquisition Tax ranging from 2.00% to 2.50% of the assessed value of the home. The exact percentage fee varies within this range depending on the Mexican state where your property is located.
ADDITIONAL FEES INCURRED FOR FINANCED TRANSACTIONS THROUGH CONFICASA

Note that execution and loan program offering should be the two most important factors when choosing a Mexican mortgage financing company such as ConfiCasa Mortgage International. While ConfiCasa Mortgage International strives to be the best, we may not always have the absolute lowest fees.

Keep in mind that saving a few hundred dollars on your Mexico mortgage loan can often cost you your Mexico dream real estate if you elect to use a Mexico real estate financing company that is not able to perform or improperly closes your real estate purchase. It is also important to note that only some of these fees go to ConfiCasa Mortgage International with the remainder distributed to our transaction partners.

  • LOAN ORIGINATION/PROCESSING/UNDERWRITING/CLOSING FEES:
    Fees vary by region, loan product and loan program. Please contact a ConfiCasa Mortgage International Loan Officer for a customized quote for your specific property.
  • COMMERCIAL APPRAISAL (AVALUO BANCARIO) FEE:
    The Aval√ļo Bancario (Commercial Appraisal) is a U.S. type appraisal completed on the standard Fannie Mae form and is used by the lender so they may determine the proper Loan to Value Ratio. Similar to the U.S. and Canada, our Mexico real estate financing partners want to be sure that the risk they are taking on your loan is covered by the collateral on the loan (your Mexican real estate) through the proper appraisal. The appraiser compares several comparable Mexico properties in the immediate neighborhood that have sold in the last six months and applies their expert opinion based on the U.S. approved appraisal process and standards. As in the U.S. and Canada, appraisals are as much of an art as they are science. One example of the complexities to appraisals involves views and beachfront properties. Views or beachfront adds to the value of a property sometimes resulting in a smaller home on the beach being worth more than a large home on a hill and further from the beach.

    At ConfiCasa Mortgage International, we use the most well-known and respected appraisers for all of our financing transactions which ensures that both the buyer and the lender partner is protected. The negotiated fee for ConfiCasa Mortgage International is approximately $1,200 to $1,500 depending on the location of your Mexico property.
FEES ASSOCIATED WITH FINANCED TRANSACTIONS THROUGH CONFICASA BUT ALSO HIGHLY RECOMMENDED AND ASSOCIATED WITH MOST MAJOR DEVELOPERS AND REALTORS
  • CLOSING AGENT FEES
    While a Closing Agent is not required for cash purchases it is almost always utilized by the most reputable developers and real estate companies. Moreover, it is required for all Mexico mortgages through ConfiCasa Mortgage International in order to ensure a smooth and safe transaction. Closing Agent fees range from $1,500 to $2,500 depending on the complexity of the transaction as well as the location of the property.
  • ESCROW FEES:
    Although escrow services are not required for cash purchases, they are strongly recommended by most reputable developers, realtors and lenders and required for all Mexico mortgage loan transactions through ConfiCasa Mortgage International. Escrow fees range from $550 to $1,500 and vary based on the purchase price.
  • TITLE INSURANCE AND TITLE OPINION:
    Although title insurance and hazard insurance are not required for cash purchases and some financed purchases (depending on the lender used), it is strongly recommended by most reputable developers, realtors and lenders, including ConfiCasa Mortgage International. While the Notario P√ļblico is well qualified and legally authorized to execute the transaction, he/she does not provide any guarantee or bear any financial responsibility to the purchases in the event of a defective title. A title opinion is needed to obtain title insurance and ranges from $1,000 to $1,500 depending on the location of the property. Title insurance ranges from $5 to $7 per $1,000 (of the purchase price). Hazard insurance fees ranges from $3.50 -$7.50 per thousand (of the purchase price).
  1 ConfiCasa Mortgage International is not a tax professional and therefore, this information should not be relied upon without checking with your tax professional.
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