Buying a Property in the USA - Financial Considerations
Expats have been snapping up properties in America for many years, with many of them moving to the business hotspots such as New York, Seattle and Silicon Valley in California to be closer to the largest corporations in the world. However, moving to the USA is not as easy as just looking on an estate agents website and putting in a bid.
In this guide, we will look at some of the considerations that you will need to keep in mind when buying a property in America.
First of all, it is worth keeping in mind that buying a house does not necessarily make you an American citizen, it will help you get your feet on the ground but there are many other steps that you will need to take in order to get a visa.
Also, you will need to be able to demonstrate your intention of purchase, is it a short or long term move? Is it just for an investment? Is it for your child or relative to live in? All of these factors will have an impact on the path you will take when buying a house in the USA.
There are many differences in how the property buying market works in the USA compared to the UK, one of the main differences being that real estate agents need to have a valid licence, so make sure that the agent you use is legally allowed to help you in your search before using their services.
The criteria for the real estate licence changes depending on the state that you are moving to, some will be more in-depth than others. Another difference is that in the USA, it is not uncommon for properties to be listed by 2 or more real estate agents which can be handy when shopping around because it means that you will have to spend less time switching between agents.
If you are not buying the property outright you should keep in mind that, in a similar way to buying in the UK, buying a house in USA comes with extensive background checks (such as credit score, employment history and financial statements), as well as a deposit or down payment, the amount of which will vary depending on the property, the state and the bank used for the mortgage.
Be prepared to provide all of these details when applying for a mortgage. Furthermore, it will help if you have a good credit score in the US already, this can be obtained by having a healthy US bank account and having employment history within the state you are buying the property in.
As with buying a house in England, buying real estate in the USA is not without various fees and taxes. These can vary slightly depending on which state you are moving to, but generally speaking you should expect to pay for the title search and insurance, as well as legal and recording fees when it comes time to close the deal.
These can amount to anywhere between 1% and 2.25% of the total cost. When it does come time to exchange contracts and complete you are not required to be in the country but it will certainly help if you are easily contactable should anything unexpected arise.
Although it is not strictly required by law, it is highly recommended to seek the services of a real estate lawyer. This will add extra expense to the process but they will help you prepare for any fees, taxes or additional checks that may otherwise take you by surprise along the way.
Remember that while moving to USA is exciting, it is important to do your research and make sure that everything is done by the book.