How Canadians Shop For American Mortgages

by: Brian.Brady on April 02, 2008 20:28:29 1 comment »

Canadian investors, seeking American mortgages, may be in for a shock when "shopping". The American mortgage banking and brokerage system is different than the Canadian banking system. In Canada, there are 5-7 major banks or lenders and a variety of mortgage brokers. Both lenders and mortgage brokers, in Canada, are heavily regulated. Loan programs, in Canada, are fewer than the loan programs offered in the States. The American mortgage industry relies heavily on the seciritization of mortgage loans. As such, there are big banks and small mortgage brokers who may very well offer identical loan programs.

Should Canadian investors then deal only with large American banks? Ask Canadian investors, with properties in escrow, this past week. Two major American banks cancelled their loan programs, on April 1, 2008, for Canadian citizens buying properties in Arizona, California, Florida, and Nevada. I have fielded 5-7 calls each day, since Friday, from frustrated Canadians.

Consider this question, posed by a Canadian borrower (about a Canadian mortgage):

Mortgage broker or big bank, and does personality count?

Do I let them compete against each other until zero hour? Hang it all and go with Broker Billy? Is there some advantage to having one's mortgage with a big bank? How important is it that I like who I'm dealing with? (If that's important, it looks to be particularly so here. Bob and Barbara irritate; Billy, I like, and he/his assistant are top-notch at quickly giving good answers to questions.) What sort of "what else is involved vis-a-vis your brand of mortgage" questions should I be asking?

Personality, I'll admit, is important for investors dealing with a "foreign" mortgage originator. The reason is that the American mortgage market is in turmoil. Loan programs change constantly. An American mortgage broker, experienced at financing "foreign nationals", offers a much better alternative than relying on an American bank. American banks are extremely risk-averse today. The banks tend to honor commitments made to American mortgage brokers because of the repeat business we give them. American mortgage brokers deal with hundreds of lenders and can be nimble if one bank decides to break its loan commitments to Canadian investors.

Rate is important, no doubt. Selecting the proper loan program is equally as important. While Canadian mortgage money is offered at the 5-5.5% range, it typically has a five-year term attached to it. Thirty year fixed rate options, at 7.0% (7.3% apr) are available for Canadian investors.

Reputation is of paramount importance. Your American REALTOR can direct you to a knowledgeable mortgage broker. That mortgage broker should be able to give you names and telephone numbers of happy customers, from foreign countries, whom she financed.

Ask me for references should you need an American mortgage.

Canadian investors, who need American financing, can apply online, call me at 858-777-9751, or e-mail me. My contact information and resume is here.