Mortgages And Loans For Property In Cr

[galsailor]

I am definitely planning on purchasing property in CR. I am an American and I have spent alot of time there in the 90's sailing extensively and know all about the development in the NW coastal Guanacaste area. After much research I have targeted that area for purchasing and will be there to view properties in October. I plan to purchase a house and an additional lot.

I am now in the process of searching for financing. I have great credit and a good amount of $$ for downpayments. I know that borrowing funds in CR comes with a high interest rate. I wanted to know if you have information on financial institutions (banks or mortgage companies) in the US which provide a better rate and are willing to loan for CR property (structure and lots without structure) at lower interest rates than what I have found already (8%+) from the instututions in CR. Or maybe there is an institution in the CR that I haven't found out about yet that offers better rates.

Thank you for your assistance,

galsailor  

[Russ]

Welcome to the forum!

It sounds like you have done some good research. The short answer is that most financing here is more expensive, and foreigners often have a hard time qualifying.  If anyone would like to know the basic legal information about how mortgages work in Costa Rica, here is a good article: CR Law, SA
Also, here is an article about banks in Costa Rica online, where you can apply for mortages - Costa Rica Banks online.  Now on to the real question!

You will not find good financing in Costa Rica, however some banks do offer financing for foreigners.  Scotiabank in particular promotes to expatriates looking for mortgages.  However, it is not necessarily the same process you will experience in the states and their current rates run 7.75%

As for US companies offering financing in Costa Rica, the market is wide open.  Meaning any company beginning this service would find itself with a monopoly!  I think the main problem is not your credit rating, since they can check that in seconds.  The trouble is they don't have the same resources here to value the property.  In the U.S., properties are very similar from city to city and neighborhood to neighborhood.  Most property values are pegged by the city for taxes and by the market.  Since so many parties are involved in the closing there, the closing price is practically public knowledge.  You can easily obtain a comparison value, even while sitting in your office at the computer.

In Costa Rica the situation is entirely different.  There is no way someone analyzing a loan could get even a ballpark value without physically visiting the property.  Transactions here are very private, in most cases the declared value in the registry is only nominal.  The city governents commonly charge property taxes based on 10% to 40% of the market value.  You can accurately calculate replacement value by looking at the construction, but the bank would find it very difficult to determine market value with much accuracy.  

A possiblity you many people find viable is getting a first or second mortgage on property they have in the U.S.  Another way deals work out is with owner financing, although this is usually short term with a 30 - 50% down payment.  You might like to contact ABC Real Estate - fine selections on the beach to explain to them specifically what you are looking for and they can help you find ideas that suit your needs.