Unlocking Mexico Financing: With Alex Koper

Video Transcript - (with Alex Koper, MoXi CEO)

Alex Koper:

Hey, it's Alex from MoXi. How are you? Thank you so much for watching this video. What we're going to cover today are some frequently asked questions with respect to should you apply now or not, and we'll give you the answers to these frequently asked questions so that you can make the best decision for yourself right now.

So the first question is, this is one we get all the time, who are eligible borrowers? At MoXi today, and it is August 2024 right now, eligible borrowers from MoXi loan programs are U.S. citizens or U.S.

permanent residents. And the key thing to remember there is you have filed personal federal income tax returns in the United States at least in the last two years, and you can provide those copies. And you have a valid credit score from U.S. credit bureaus.

Those are the key things to keep in mind if you're trying to determine are you an eligible borrower. Remember, all borrowers that appear on the loan must also appear on the deed. And so for example, if you do not meet MoXi's borrower citizenship eligibility, maybe you do and a co-buyer doesn't, MoXi would not be able to oversee the transaction if you are both going to be untitled. So keep that in mind.

The second question MoXi receives regularly is, is there a minimum property value? And the answer is yes. So MoXi loans are typically best for folks that are transacting on properties with a value of 350,000 U.S. dollars or the Mexican peso equivalent of that. So if you are transacting on a property that has either a purchase price or an estimated value below 350,000 U.S. dollars, you are likely not a candidate. You are of course welcome to apply, but that is typically the minimum property value we look for as it relates to MoXi program minimum loan sizes. And also does it make sense for you? Is it the right fit?

The next question we often receive is, how much do I need to have saved for a down payment? And it's a really, really good question. So for purchase transactions or rate and term refinance transactions where we're paying off another lien, MoXi's maximum LTV or loan to value is 65% of the appraised value or purchase price of the property. For cash out refinance, meaning you're going to take cash out of the property, you don't have a mortgage that we're paying off today, the maximum LTV is 60%.

So let's focus in on purchase transactions and rate and term refinance transactions for now. On the purchase side, you'll want to have saved down payment of at least 35% of the purchase price; 65 LTV, 35% down payment saved plus your closing costs plus loan reserves. Closing costs in Mexico for foreigners that are purchasing property are anywhere between five and 10, even higher percent of the purchase price. So make sure that you have your 35% down payment saved plus at least five to 10% of the purchase price in closing costs.

That is a very, very high number if you've never purchased property as a foreigner in Mexico before. We have another video and an entire letter. We call it Mexico Real Estate 101, and it's a letter of fee disclosure that we're happy to share with you if you'd like to review the itemized, how we get to the five to 10%. You can also check out our Mexico Mortgage Estimator Mortgage calculator on our website as well. That gives a lot of great information about our programs.

Okay, so the next question we frequently get is are closing costs to buy a property in Mexico as a foreigner really five to 10%? And the answer is yes, they really are. So anything from government transfer taxes to notario fees, to tax appraisals, to secretary of foreign affair permits, to fee to commisso set up charges and the first year, to your hazard insurance first year and so forth. Five to 10% of the purchase price is what you should anticipate and/or budget for in closing costs.

Okay, next question we commonly get is about credit. So some of these questions look like my credit score is kind of iffy, is that okay? And the answer is no, MoXi does have a minimum credit score and that is 700. Interestingly, most MoXi borrowers tend to be well north of that, but the minimum credit score for MoXi loan programs is 700. So you might want to just keep that in mind. Of course you're welcome to apply, but keep that in mind as far as the minimum is concerned.

The next question is a very interesting one and one that we get all the time, does MoXi Finance new construction? The short answer is yes, MoXi does finance new construction, and MoXi will advance loan funds when the title transfers from the developer to you. So if you are just starting the process of looking at a pre-construction home of some sort, home condo, you'll want to check back with us as you get a little bit closer. So MoXi will not advance loan funds until title transfers. MoXi's closing policies are the same as Mexican law. So if the property is not built, we don't have anything to appraise. If the condo regime is not recorded, it cannot legally be transferred to you. If the construction is not manifested with the public registry and/or with the Catastrola Tax Office, it cannot legally be transferred to you.

So those are the requirements for a legal property transfer, legal closing in Mexico, those are the same requirements MoXi has. So yes, we lend a new construction, but we don't actually make the loan or advance those loan funds until property is going to transfer to you at the closing; which means the property is built and the developer is filed the required documents. If you are in contract on a new construction purchase, we recommend applying with MoXi 90 to 120 days approximately prior to delivery and legal transfer. That might be different than your occupancy date depending on what you've worked out with a developer, but keep that in mind.

Next question we get is how long is your pre-approval valid for? And sometimes people tell us, "I don't plan to buy or refinance for another couple of years." Well, great question pre-approvals and/or fully underwritten approvals are generally valid 90 to 120 days. So if your Mexico property finance plans, whether that's purchase or refinance, are not for a few years down the road, maybe it doesn't make sense; of course you're welcome to apply, but it may not be a great exercise just given the validity dates of fully underwritten, pre-qualifications, MoXi match, pre-approvals and so forth.

Okay, let's talk a little bit about fees. We're going to have a separate video or we have a separate video that really dives deep into fees, costs, and charges, both of that five to 10% closing cost amount. But let's talk about for applications specifically, you're trying to decide should I apply now? Am I a candidate to apply now? And of course, anyone is welcome to apply, but the following applies. So if you submit your application to MoXi via our secure application portal, we'll link that by the way on this video, you'll immediately receive, as soon as we get the application, you'll get an automated email with instructions to pay your application fee.

That's $150 plus payment processing fee, and you'll get the instructions and link to do that once you submit your application. If you want a fully underwritten pre-approval, we do offer that. Again, the underwriting portion of this or the pre-approval validity is really 90 to 120 days.

So if you're actively shopping, this is a great idea because if you get into contract, you've cleared that hurdle already and there is a $500 charge plus payment processing fee for a fully underwritten pre-approval to cover the cost of the actual underwrite through our vendors. And so that is also due at submission.

Those are the basics. And by the way, if you do choose to get a fully underwritten pre-approval, that $500 you paid is credited towards your underwriting fee when you go into contract. But again, that credit decision is usually valid for 90 to 120 days. Hope this helps in making your decision about whether or not it makes sense for you to submit your loan application to us today. If you've cleared most of these or you still want to apply regardless, please do so. And again, we'll put the application link below.

Thank you so much for thinking of us. We look forward to working with you. Take care, that's all for now. Bye.