Past & Present Financing Options in Mexico

In this interview:

• Some alternative lending options to MoXi
• Mexican bank options
• Developer loans
• How these options differ and how to choose

Video Transcript - (Speaker: Alex Koper, CEO)

Today in 2022, which is when we're filming this video, there are a couple of new lending options besides MoXi that were not available previously. There is a Mexican bank that is not new. No fixed rates there, but a great option for foreigners. Great reputation, great Mexican bank, that's now offering foreigner financing only on purchases. They're not doing refinance or cash out refinance to our knowledge. Their rates are adjustable, so tied to either the LIBOR index or a Mexican index. 

The origination is also in US dollars, but it is serviced in Mexico, so there's no reporting of mortgage interest to the IRS in the US. Giving clients an option to potentially write off that interest. MoXi does that. We service the loans at MoXi in the United States, and report interest that way on those fixed rate mortgages.

Some of the same options still exist that have been around for some time. And that's some of the Mexican banks that will make foreigners loans with some of those exotic terms, so that's still an option available.

Then finally, developers, if you're buying new construction a developer might offer you financing. One thing to be aware of is that developer financing often has a balloon payment associated with it, so they might offer you an amount to complete your purchase where you don't have to bring all that cash in. Right, but you'll be required to make a large balloon payment three, five, six years down the line. So for some folks that's an element of stress, right? 

That precludes their ability to enjoy their new vacation home. And so, we work with clients that have accepted the developer financing in the past and want to refinance out of it into a 25 year fixed loan. It's absolutely fine. Clients sometimes find us, didn't find us when they were originally doing their purchase, or maybe we weren't around then.

They’re finding us after the fact, so we're helping with refinance on those terms. Then finally, another way that Moxi is really changing the game as it relates to Mexico specifically. Is that to our knowledge MoXi is the only lender that's offering cash out refinance to US citizens secured by property trust rights in Mexico, and cash out refinance is a really powerful tool. Especially in this day and age from a liquidity standpoint. We have clients that come to us who have a lot of equity in their home in Mexico because they did pay cash. They didn't know of any financing options available then. 

Maybe they took out a HELOC in the US. Maybe they borrowed money from their 401k or did a withdrawal from their investment account, and so we do a lot of what we call takeout refinances or cash out refinances where we are putting a new mortgage lead secured by the trust rights of the Mexican property.

Then we are advancing the cash where the principal balance of the loan amounts to the client who can either do any number of things with it, right? Improve the property, do a remodel, maybe buy another unit. It's been such a great rental investment property that you want to buy another unit in the same development, or you have family and friends that join you so often that you need more space, or use it for investment purposes outside of the country of Mexico. That's totally fine. 

All of MoXi’s originations are in US dollars. No foreign exchange risk from that perspective, and then Moxi loans are serviced in US dollars as well. Which is really powerful from the standpoint of, you're earning your income in US dollars. You want to make sure you're repaying a loan in the same currency so you're not subject to that foreign exchange risk at all. Those are just a couple of powerful ways that Moxi is helping to change the game here.