Mortgages are being provided by several lending firms by using a foreign-national mortgage, where overseas buyers can buy a house or invest in the U.S.
American borrowers are slowly decreasing in numbers because of low income growth, which then resulted to turning to foreign investors, according to Anthony Sanders, an economics professor at George Mason University in Fairfax, Virginia.
Several firms are offering foreign-national mortgages to clients including HSBC Holdings, FBC Mortgage and Mega Capital Funding Inc.
These firms are reportedly pooling in wealthy foreign investors, whose loans require 30 percent to 40 percent down payment, higher than the 20 percent for domestic investors in the U.S.
In Florida, where the largest share of cash sales in the U.S. from home purchases were reported, community banks resorted to lending to foreign buyers.
The biggest hurdles that lenders have to face are verifying the credit profiles of the foreign investors. Other countries have different rules on taxes compared to America.
On the other hand, the process of applying for a mortgage loan has been more and more challenging.
Back in 2006, foreigners only needed a passport and an application to get a mortgage. The U.S. housing crash made applying for a loan seem an obstacle for foreigners, as there are "a lot more checks and balances," according to Andy Scott, President of International Mortgages.Net in Orlando.
Foreign buyers from U.K, Canada, China, Mexico and India make up 54 percent of the foreign sales from Jan. to March, while the frontrunners in international buying include Florida, Texas, Arizona and California, according to the National Association or Realtors.
Adele and Mark Lee, who reside in England were able to apply for a U.S. mortgage for a vacation home in Florida, near Disney World.
Despite the boom in foreign-national loans, people applying for mortgages for buying a house have fallen 10 percent this year, according to Mortgage Bankers Association.
High Borrowing costs and competition from foreign investors reportedly kept American homebuyers from applying mortgages for house purchases.
