Daily Mortgage Rates LIVE - 10/22/2024 - Foreign National Borrower Loans

In this episode of Daily Mortgage Rates Live, we’re shedding light on Foreign National Borrower Loans—a specialized lending option for non-U.S. citizens looking to invest in or purchase property in the United States. With real estate being one of the most sought-after investments, especially for international buyers, understanding the ins and outs of Foreign National Loans is crucial for both lenders and potential borrowers.

Are you wondering how the interest rates and down payment requirements for foreign national loans compare to those for U.S. citizens? What about legal implications, visa statuses, and tax considerations? This episode covers all of that, along with insights into why foreign investors are drawn to the U.S. real estate market and how lenders can seize this opportunity by offering tailored solutions.

Whether you’re an international buyer eager to get into the U.S. housing market or a lender seeking to understand the growing demand for foreign national loans, this episode provides the roadmap you need. Learn how to navigate this complex but rewarding segment of the mortgage market and help your clients achieve their property investment goals!

Tune in to discover how Foreign National Borrower Loans are opening doors for global investors and expanding opportunities in the U.S. housing market.

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in j

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Episode Transcript

Restream recording Oct 22, (00:00):
So, welcome everyone.
My name is Kyle Hiersche.
I'm the COO of The MortgageCalculator, joined here by our
president, Nick Hiersche, andour CSO, Jose Gonzalez.
We are a lender that specializesin non QM loans.
And what we do every weekday at11 a.
m.
Eastern on the show is gothrough our actual live rates,
and then we do a deep dive intoa different loan type.
And today's topic is foreignnational loans.

(00:21):
So, I'm going Let me go aheadand turn it over to Nick here.
So first we can see what therates look like today.
So go ahead.
All right.
So today is October 22nd justafter 11 a.
m.
So all of our standard programshave their initial rates for
today.
We'll compare across the programto be like a full breakdown and

(00:46):
itemized loan estimate thatbreaks down all the fees that go
into the APR that we're going tocompare.
Please get with our teammembers.
They'd be happy to send thatover.
All right.
We will set up a basic scenarioso that we can compare equally
across all the options.
We'll set up a one unit singlefamily home, 500, 000 purchase
price, 400, 000 loan amount.
That corresponds to 80 percentloan to value, 20 percent down
payment.

(01:07):
We'll use an estimated 760 FICOcredit score and an estimated 40
percent debt to income ratio.
So with those settings, let'scheck out the rates today.
So first up, our 30 year fixedconventional for a primary home.
Most common option people thinkof when they think of a
mortgage.
Rates today coming in at 6.
375.
Final APR 6.
684.

(01:28):
Bumped up a little bit therefrom yesterday.
And if for any reason ourcustomer doesn't qualify for a
conventional option, wetypically want to compare an FHA
option, which allows moreleniency on credit issues and a
higher overall debt to incomeratio.
But does require upfront andyearly mortgage insurance.
FHA comes in today, 5.
5 rate, final APR with all thefees and mortgage insurance, 6.
464.

(01:50):
So if our customer qualifies forboth, FHA could be a touch
cheaper if they're willing to dothe mortgage insurance.
And if our customer needs to useFHA, definitely a good option.
The APR is very comparable.
Now, moving on to our VA optionhere.
That's only for eligible vetsand active service members.
If you are eligible, theseprograms are great.

(02:11):
As you can see, it's much lowerrates than the other options.
Rates as low as 5.
625.
Finally, PR with a standardfunding fee here, 5.
927.
So, we compare that across theother options.
VA is always going to be thebest for our eligible borrowers.
And we'll scroll down here toour final standard option here.

(02:31):
USDA is only for properties inUSDA eligible areas.
So if the customer is eligibleand the property is eligible,
these are great to compare.
Comes in today at 5.
625 rate.
Final APR with all the fees, 6.
383.
So it actually ends up being atouch better than FHA, which is
typical, back to normal here.
And better than conventional aswell.

(02:52):
So those customers looking inthose areas, definitely check
out USDA.
Should be the best option forthose rural areas.
And that rounds out our standardoptions that most banks or
lenders have.
Now, if our customer doesn'tqualify, unfortunately, many
banks or lenders have to denythem, but that's where we have
over 5, 000 additional optionsfor non QM, starting with our

(03:13):
alt doc options for a primaryhome.
So if our customer doesn'tqualify with standard documents
for conventional and FHA, taxreturns, et cetera, needs to
switch to using alternativedocs, switch here to alternative
docs for the same rate, which isamazing rates as low as 6.
375 today.
Final APR, 6.
707.
So just a touch aboveconventional to switch to

(03:33):
alternative docs, which isamazing.
So our customer can still getthat home they really want.
And we can use Alt Docs forinvestment properties.
So tons of options forinvestments.
The first option for Alt Docshere, again, bank statement or
similar rates as low as 7percent today.
Final APR, 7.
35.
And we'll compare that to allour other options for investment

(03:56):
properties.
So we do have our conventionaloption here.
Remember, there are nogovernment options, so no USDA,
FHA, or VA, but we do have thisconventional for investments
coming in today, 6.
875, final APR, 7.
211, which is a touch cheaperthan AltDoc, which is typical,
but not cheaper than ourfavorite loan options, our DSCR,

(04:17):
stands for Debt Service CoverageRatio.
No income information needed, noemployment information needed.
We simply use estimated rentsfrom the appraisal to determine
a DSCR ratio.
The estimated rents cover theexpenses.
That is a positive DSCR ratioover one, aka the property cash
flows monthly.
For those options that have aDSCR ratio over one, and we add

(04:38):
a three year prepayment penalty.
Rates today come in at 6.
499, final APR 6.
835, beating conventional byquite a bit.
That is amazing.
And we can sweeten the deal evenmore with a five year prepayment
penalty allowed on someprograms.
Rates today come in at 6.
375, final APR 6.
707, again, beating conventionalby quite a bit.

(05:00):
Great option.
And the final DSCR we do in ourdemo here is a no prepayment
penalty option, as some statesdon't allow a prepayment penalty
and some investors prefer not tohave one.
Great option here though.
Rates come in at 7%.
Finally, PR 7.
337, almost identical toconventional.
I'd say a hundred percent ofinvestors would use a DSCR when

(05:20):
the prices are this similar andeven when they're much higher.
And our final options here are30 or fixed second mortgages.
These are great options forborrowers who may have lower
rates than what we're looking atnow.
and still need to access equity.
So typically the traditionaloption is a HELOC, which is an
adjustable rate mortgage, uh,much higher rates than we see

(05:41):
here.
So our alternative to that isour 30 year fixed, fixed rate
mortgages, second mortgages, andthis is on a primary home.
Our primary borrowers can getrates as low as 8 percent to get
that cash out.
Final APR 8.
384.
And again, these are fixed andnot adjustable and much lower
rates than HELOCs.

(06:01):
And he locks are very rare forinvestment properties.
So these are great options forour investors.
The 30 year fixed secondmortgage, get cash out of that
investment property rates as lowas 9.
3 75 finally PR 9.
7 for six.
So let me go ahead and switchinto our topic for today.
Just like yesterday, uh, wedon't get to adjust the, uh,

(06:25):
citizenship type to specialcitizen types when we're doing
our live demo here.
Uh, so everything we're lookingat was for a standard U S
citizen.
Okay.
But we also have options under afew different programs for true
foreign nationals.
So yesterday we did I 10s Whichis not a foreign national today.
We're going to talk about a trueforeign national So Jose, let's
define foreign national firstand then check out our options.

(06:47):
Good morning, everybody Thankyou for joining us for daily
mortgage rates live with themovies calculator.
Yes yesterday We went over i 10which is commonly confused with
foreign national borrowersbecause they both do not have
legal status to reside full timein the U.
S.
The difference is that theforeign national borrower

(07:07):
resides outside the U.
S.
permanently.
If income is being used, theyalso derive their income outside
of the U.
S., and unless specificallynoted in the guidelines that you
may be considering, the foreignnational is also not required to
have U.

(07:28):
S.
based credit.
Uh, four nationals can purchasefull doc or D.
S.
C.
R.
And they can also purchasesecond home, uh, or, um,
investment.
So let's go into the optionsthat we have for you today.
We have some great for nationaloptions.
75 percent is the maximum L.

(07:50):
T.
V.
On our four national loans.
And here we're looking at 8.
3, 7, 5 is our lowest costoption with a lender credit,
which is nice to see a 0.
025 points.
And you can buy this down allthe way to 5 for our DSCR

(08:13):
option, which you will see isthe lowest rate and lowest cost
option, because frankly, Ibelieve that underwriters are
going to feel more secure atverifying the income that the
property is generating from therental as opposed to the foreign
nationals income country oforigin.

(08:35):
And that situation you can seeright here in that The full dock
purchase also, also 75 percentLTV investment lowest cost
option there is 9.
375 substantially higher thanthe DSCR option and our lowest

(08:56):
rate option is 8.
25 at a cost of 3.
5 points.
And now for our, uh, fornational full doc, second home
purchase 9.
25 is our lowest cost option atpar.

(09:16):
And you can buy that down allthe way to 8.
5%.
Please note also that in oursecond home options, you're
going to see the pricing is alsoa little worse than the other
options because, uh, being asecond home, uh, you're not
permitted to add a prepaymentpenalty.
So now our cash out refinanceoptions, 70 percent is the

(09:42):
maximum LTV for, for nationalloan.
Cash out refinance transaction.
And here, our first option isour full doc option.
9 percent is our lowest costoption at par.
And we can buy that down all theway to 8.
25 at a cost of 2.

(10:03):
25 points for our second homefull doc cash out refinance at
70 percent LTV for our foreignnational.
Our next option is our full doccash out of the investment
property.
Now, this one has a three yearprepayment penalty added to it.
9.
125 is our lowest cost option atpar, and you can buy that down

(10:28):
all the way to 8 percent at acost of 3.
375 points.
And our last option here.
Is our DSCR cash out refinance9.
125 is our lowest cost option atpar.

(10:48):
And you can buy that down allthe way to 8% at a cost of
3.375.
So remember the avenues that areavailable for your foreign
national borrowers, the SERinvestment purchase or uh,
second home purchase.

(11:11):
All right.
Let's see.
Do we have any questions here?
It looks like we do have onequestion.
I'm not sure exactly.
So the question is, are theseall workers?
I'm not sure exactly what thatmeans, but do you just want to
touch on employment in, ingeneral, Jose?

(11:34):
Yup.
Um, the full doc loans, uh, whenwe're verifying full doc for a
foreign national, uh, what wehave to consider is, are they
self employed?
Or are they an employee?
If they're self employed, wewill request, uh, it will
require a letter from theiraccountant, from their country

(11:56):
of origin stating the income forthe last two years, the year to
date income, their percentage ofownership in the business and
the name of the business andwhen the business was
established.
If they are an employee of acompany, we will send a letter,
which is similar to the letterthat we send, uh, for the self

(12:17):
employment where the employerwill basically complete the
letter stating their income forthe last two years, year to date
income, name of the company, andit'll be on the company
letterhead.
So those are, those are the twoscenarios for employment and
keep in mind that we actuallycan, uh, offer second home
option for foreign national,but.

(12:39):
To be aware that the second homeoption does not allow a
prepayment penalty.
All right I don't see any morequestions So we'll go ahead and
wrap it up Remember that we dothis show at 11 a.
m Eastern every weekday where wego through our live rates, then
we do a deep dive into adifferent loan type So we'll be
back tomorrow with a new loantype.
We'll see you 11 a.

(13:00):
m Eastern tomorrow for the nextepisode of daily rates live with
the mortgage calculator.
Have a great day everyone