Buying Residential Real Estate in Florida from Overseas – Part Two: Money Matters

Welcome to the second part of our three-part series of articles about buying residential property in the Sunshine State. In this article, we’ll be looking at the fees and charges associated with buying a property in Florida from overseas.

Calculating the Cost

In addition to the purchase price of your piece of Florida, buyers should allow additional funds to cover the closing costs. Closing costs are complicated, some are fixed fees such as settlement fees, courier fees, recording fees and some are variable, calculated upon the sales price of the property such as state stamp taxes.

The closing statement is known as the HUD-1 and itemizes all the charges imposed on a borrower and seller in a real estate transaction.

Realtor commissions are paid by the seller in the US.

Property taxes are paid annually in the US and in Florida are 2% of the assessed value of the property.

Finding the Right Mortgage

There are various options to consider if you need raise a mortgage for your dream home purchase.

Mortgages are available in the US for overseas investors, even in this post-credit crunch era. The mortgage would be secured on your Florida home. As a foreigner, you will typically need a deposit of at least 35%. An advantage of holding a US mortgage is that you can reduce your exposure to exchange rate fluctuations if you are planning to receive a rental income in dollars.

Alternatively you could raise finance in your home country either by remortgaging an existing property or by obtaining a new mortgage on your Florida home. The advantage of this is your own familiarity with the mortgage market at home.
However, in the UK and other developed countries, there are many mortgage consultants with experience of helping investors find the best way of financing their American dreams. Your ability to obtain a mortgage at a decent interest rate will require a good credit rating and evidence of earnings.

Transferring Funds to the US

If you are a cash buyer or obtain a mortgage in your home currency, you will need to purchase a large quantity of US dollars during in the buying process. When obtaining financing to purchase your American Real Estate and wiring funds to the US there must be a clear trail evidencing the source of the funds.

If you are planning to collect rental income in the US, you may want to consider opening accounts with a bank with presence in both your home country and the US. Some international banks offer low-cost or fee-free transfers between accounts in the US and countries like the UK or India e.g. Citibank.

You could save more than $1000 for a typical home purchase by using a currency broker like HIFX and Moneycorp to buy your dollars. Be aware that FX brokers tend not to be covered by regulatory authorities, so it is probably best to use a larger, reputable firm.

You may also want to consider obtaining a forward exchange rate to protect yourself from adverse currency market movements between exchanging contracts and completing your home purchase.

If you are based in the UK, check out Martin Lewis’ Money Saving Expert website for up to date information about the best deals on foreign currency transfers.

Conclusion

We hope you’re clearer now about the types of costs you’ll face when buying your dream home in Florida. In the final part of this series, we will be looking at settling into your Florida home and give you some top tips for maximizing your rental income. See you next week!

Kelly Charles is a licensed Florida Realtor working in Miami Beach. She specializes in helping overseas investors enter the Miami real estate market.

www.BritishMiamiRealtor.com