Why Financing in MX is Better Than Paying Cash

Video Transcript - (with Chris)

Chris:

Hey folks, my name is Chris Childress. I'm a proud member of the MoXi Global Mortgage Company family here. Wanted to touch base with you on just a couple of reasons why I suggest financing with MoXi versus paying cash.

A lot of our friends will ask me, "Chris, I've got the cash, I'm able to fund this thing wholly. Why should I finance versus paying cash?" And first reason that I would say, the first answer I'd give my closest friends and family, is that whether you're paying cash or not, you're actually financing. Whether you're borrowing from yourself or you're borrowing from an institution, you're actually financing the deals.

So you want to take into consideration your rate of return on your funds, and do you really want to leverage your liquid assets, stuff that's easily accessible to you, to secure an investment in a foreign country when you could actually leverage that particular asset with a company like MoXi, a global mortgage company? So that's the first thing. You're borrowing anyway. If you can get a loan that makes sense for you and your family and your financial situation, then by all means that's the best way to do it so you can continue to keep your capital working for you.

Another great reason to finance with MoXi versus some of the other options is that MoXi has really spent a lot of time and energy and effort to make sure that our process, which is tailored specifically for US citizens, will emulate the experience that our US citizen borrowers are used to back home. What I mean by that is that the initial forms you fill out for your loan application, the documents that you're going to provide for underwriting, a lot of the terms and phrases and processes are going to feel very, very familiar. So we've built this process to feel just like that, but we've incorporated some of the differences with regard to the Mexican collateral piece and whatnot. Excited to share more information with you on that as we proceed.

So we at MoXi understand that you have choices. There's different sources. While there's not many sources for institutionalized lending in Mexico for foreigners, there are options. You can borrow back in the United States against assets back home, you can leverage investments, your own capital to lend, and there are other options here in Mexico. So what I'd like to share with you is why we feel that MoXi is the best option for the US citizen.

First and foremost, it's going to be the most safe and secure and familiar experience that you'll find in this marketplace if you intend to leverage the actual asset here in Mexico. What I mean by that is that we offer long-term fixed rate mortgages specifically for US citizens. Amortization periods extend anywhere from 15, 20, 25, and even up to 30 year fixed rate mortgages. There are no balloon payments. There's no prepayment penalties or anything along those lines. This is going to be a safe and familiar mortgage investment.

Relative to some of the other options, a lot of people will say, "Hey, I'm going to do a home equity line of credit on my asset back in the United States," but in that instance, they're going to enter into an adjustable rate, more of a revolving type deal. In a market where you've got volatility and movement and the interest rates and whatnot, ebb and flow, it makes sense for an asset or an investment such as real estate in a foreign country, want to make sure you're safe and have that longterm fixed rate feature for safety and security.

And then secondly, we don't have any other exotic features. Some of our competition and competitors in Mexico, they have other features such as shorter terms based on credit risk factors, so you might think you're applying for a 25 or a 30-year fixed rate mortgage. Your approval might come back, it is 7 or 10 or 12 years, something that might not fit for you.

Also, they have other requirements such as life insurance requirements and just different things that just drive up the cost and make it, again, an unfamiliar product. With MoXi, we're proud to say that we've designed this to feel very, very familiar and be a safe and secure investment.

We're always excited to get feedback from our customers, and one of the things that I hear most often, especially with dealing with our affluent borrowers and super high-end real estate and that kind of stuff, is that when we're talking about terms and conditions and cost and fees and the things that we're associated with doing a mortgage, a lot of times our customers say, "Chris, we really don't need the money. We're looking to leverage from a business perspective or a strategy perspective, but at the end of the day, we don't necessarily need your money." And then they'll come back and provide feedback to us and say, "Hey, I'm glad that I went ahead and finance with you and here's why."

Obviously with MoXi financing the real estate and foreign country, we want to make sure that first and foremost, we're out for the best interest of our borrower, but we've also got to look out for the interest of our investors. With that being said, our team is going to go through an extensive process. Obviously we're going to qualify a credit perspective and the normal stuff you do with the mortgage, but we're also going to underwrite and scrutinize the collateral piece and the title of that property as aggressively to make sure that you as the customer are in fact buying what you agreed to buy, we are financing what we agreed to finance, and that we are all confident that once we close and fund the transaction, that it is a safe and secure and perfectly, if you will.

So a lot of guys are coming giving us feedback that in cash transaction, their peers and their friends have maybe closed, and maybe done something like a soft closing or funded early, we'll take care of the paperwork type stuff later. And then time just goes by when they find themselves in a precarious situation where they really don't own the asset that they've maybe funded in the past. So there's added value to using MoXi and their team to make sure that once you close and fund the transaction, that you get what you're actually agreeing to buy. There's a value with MoXi.

Oftentimes when I'm talking to borrowers, and we're going through the initial process and discussing what it looks like with financing real estate with MoXi for a US citizen, we're talking about all the different things such as fees, the cost associated with closing, interest rate financing, the idea of financing. And surprisingly enough, a very large percentage of our customers have the ability to fund and don't really need the resources in MoXi in order to purchase the real estate in Mexico.

So oftentimes we'll have these conversations, "Chris, we're talking about fees, we're talking about this. Why should I use MoXi versus just paying cash and not worrying about it?" And there's several different reasons.

First and foremost is a security factor. Whenever we're going to underwrite a file, we're going to obviously take a look at the credit and qualifying in that piece for the borrower, but we are going to equally and as aggressively scrutinize the property and make sure that that title is clean, the property meets the requirements that we need. We want to make sure that that's a safe and secure investment for our borrower. And then obviously we have best interest in protecting the assets of our investor. So when closing with MoXi, you can rest assured that we've gone through the process to make sure that you are actually buying what you agreed to buy, we are financing what we agreed to finance, and when everything is said and done, it's a perfected lien and everybody can feel confident in the transaction.

A couple of examples of what I'm referring to on this. We actually had a customer come to us one time to refinance a property that they had owned for many, many years, I believe they had owned it 14 or 15 years, and they just wanted a simple cash out refinance. They had paid for this property in full, thought they owned it free and clear. Came to us with a refinance, come to find out they didn't even own the property. And what had transpired was they had been talked into doing what we call a soft close. And basically what that means is that the legal transfer process for the collateral, or for real estate in Mexico, takes a period of time. It's an extended life cycle, if you will. Oftentimes, people are excited, they're ready to get down here, they're ready to get their keys, move into the place, start enjoying the property, and they've got the funds sitting here ready to do so. So why wait? Why don't we just fund now? Here's the keys, here's the money. Enjoy the place. We'll take care of recording the documents later on.

While that happens fairly often, and in some cases it goes off without a hitch, very often we find out that maybe the recording wasn't actually taken care of after the fact, or maybe there was misinformation in that. In this particular instance, it had been well over a decade, the documents had never been recorded, which meant that the original capital gains tax was never paid for the seller, the acquisition tax was never paid by the borrower, and HOE fees and other fees were never transferred to the new borrower so this was just accumulating over a long period of time. In order to do a refinance of just a couple of hundred thousand dollars for a small condominium here in Cabo, San Lucas, Mexico, I believe this borrower had to invest close to six figures just to unravel a mess in order to perfect that lien and actually transfer that asset into their own name.

And this is just one example of so many that we've heard. So again, if you want a partner who's going to make sure that the home that you're investing in for you and your family, or as an investment opportunity for you and your portfolio, if you want to make sure that this is a safe and secure investment that you can see returns on for many, many years, partner with a group like MoXi.