From: rajiv@bongo.cc.utexas.edu (Rajiv Arora)
Newsgroups: misc.consumers,misc.consumers.house,misc.invest.real-estate
Subject: Re: mortgages for non-residents
Date: 26 Aug 92 16:17:16 GMT
Followup-To: misc.consumers
Distribution: usa
Organization: The University of Texas at Austin, Austin TX

In article <1992Aug24.133739.4017@newstand.syr.edu> podgorny@npac.syr.edu (Marek Podgorny) writes:
>I am an H-1 visa holder and looking for a house in US. Before I started, I
>had conversations with agents of two lending institutions to check pre-
>qualification conditions. I told them explicitely up front that I do not
>have green card and they said - no problem. So I have made on offer for a
>house. The seller's broker wanted to check on his own if I can get a
>mortgage, and he came up with entirely different story: the non-residents
>cannot get a mortgage without 25% downpayments. Now, I know people who
>got mortgages not being residents and paying just 3% (1st buyer option).
>Other lending institutions in the area, when asked, seem confused. I am
>not willing to pay $500 for qualification just in order to be told that
>I do not qualify in the first place. Are there any comments about this?
>I will appreciate them.

Having bought a house recently while on H-1 status myself, I can offer some
pointers. Your seller's broker is partially correct about the 25% down--that is
the down payment required from nonimmigrant borrowers TO AVOID PMI. This is as
opposed to the rest of the populace who only need 20% or more to avoid paying
PMI.

There are all kinds of Fannie Mae (FNMA) guidelines regarding loans and PMI.
Only *some* lenders will make loans to H-1 holders. In Austin, we had no
trouble finding one. Those that do will usually require at least 5% down but I
don't think this is explicitly defined by FNMA. The PMI charged to H-1 holders
is slightly higher--our bank quoted us 2.5% for the lump sum PMI (vs. 2.2% for
residents) with a 10% down payment. For the installment PMI, it was 0.65% down
and (0.35/12) % per month. I don't remember what the resident rates were.
Finally, FNMA requires H-1 holders to carry PMI for at least 7 years, whether
or not the property's LTV (loan-to-value) ratio drops below 80%. Residents
usually can apply to have PMI discontinued (and receive a portion of their PMI
down payment) if they can prove, via a recent appraisal, that their LTV ratio
has dropped below 80%.

In dealing with various lending institutions, I found all the loan officers
woefully uninformed regarding FNMA regulations for H-1 and other nonimmigrant
visa holders. My advice to you is to call various lenders and ask them:
    1) whether they are authorized by FNMA to make loans to H-1s;
    2) what would be the min. down payment, the current rates for the type of
    loan you're interested in, and the rates and minimum duration for PMI.
    ENCOURAGE the officer to go and talk to his/her underwriter or check the
    FNMA guidelines and call you back.

Also ask them to tell you how their quotes would be different if you were a
resident. For example, one bank quoted me a higher rate for a 30 yr.
conventional loan, claiming it was because of my H-1 status. Most others were
willing to give me the exact same rate as for residents.

Finally, ask each lender you talk to to send/fax you a copy of the good faith
estimate of closing costs. Though they are required to do this only after you
apply for a loan, most will send you one based on the info you give them over
the phone. This allows you to comparison shop. Get them to send you 2 versions,
one for H-1s and one for residents. This way you can see where you're being
penalized for your status. If the loan officer seems reluctant to do that,
simply hang up, call again and ask for some other loan officer. Pretend you are
a US citizen and get a quote.

Good luck on your mortgage hunt! If you continue to draw a blank, do not lose
heart. Many banks will make loans that do not adhere to FNMA guidelines. This
happens if the bank decides to carry your loan to term rather than go out and
sell it on the secondary market. These situations can occur if, for example,
your employer or other influential people intercede on your behalf with the
bank.

-- 
******************************************************************************
* Rajiv Arora			Email: rajiv@bongo.cc.utexas.edu	     *
*				Phone: (512) 795-9015			     *
******************************************************************************