At some point in our lives, we fantasize about owning a vacation home in some beautiful part of the world. Or great escape may be in a home, cabana, cabin or a chalet near a lake or by the ocean. Buried in a lush forest or among a mountain range, or whatever scenery seems more appealing to live, vacation, or even retire to. Turning a fantasy like this into a reality is possible, but buying a home outside the United States is a complicated process. Buying a home in a foreign country often requires complicated contracts that must be translated, larger down payments and higher interest rates.

The United States mortgage lending institutions will not loan money to individuals for the purposes of buying a home on foreign soil. Individuals must obtain a loan through a mortgage lending institution in the country they wish to buy in.

American home owners have the advantage of the U.S. tax write off. This is when the Internal Revenue Service will make deductions on the mortgage interest of the primary home and the second home for up to one million dollars, no matter where in the world the second home is located. As long as all requirements are met for the primary and second residences, this is true.

Gathering all the necessary paperwork and organizing it in a way that the Internal Revenue Service will find acceptable may take some time to do. Especially if the paperwork must be translated into English. Mortgage interest paid on the property, along with all money involved, will have to be converted to American funds. This entire process will come along more smoothly if the individual employs a tax preparer to help convert these transactions.

The value of the American dollar can be a bonus when buying a home on foreign soil. The buyer should expect some headaches with the amount of paperwork involved though. Some countries have laws that regulate what types of properties and locations can be bought by non-citizens. For example: In Mexico, non-citizens are not allowed to buy beach front properties.

Usually, buyers can overcome many problems once they have found the property of their dreams with plenty of patience and persistence and the right mortgage lending institution. Buyers must make sure to find a real estate agent and mortgage lender that are familiar with the rules about non-citizens buying property in their country.

Buying properties in Canada and Mexico is a fairly easy process compared to buying properties in other foreign countries. Buying properties in other parts of the world may prove more challenging and would be best if the buyer checked in with the United States Embassy in the country where they would like to buy properties.

Mortgage requirements are pretty much the same in foreign countries as it is in the United States. First the buyer will need an appraisal on the property to prove that it is worth the asking price. Then the buyer will have to prove their credit worthiness to the lending institution by providing income tax statements, references and proof of employment. The buyer may have to make an extra effort to prove that they will be able to make the required monthly payments.

There may also be extra costs involved in obtaining a credit report that must be sent internationally and if the credit report must be translated. Interest rates on foreign property can vary throughout the world. So regardless of the value of the American dollar, don’t expect to save a lot on interest rates.

Down payments on property in Canada can be as high as 25% and the entire transaction can be done in English, in exception of Quebec, where law requires the transaction to be done in French. Mexico often requires a down payment as high as 60% for a 15 year mortgage. All Mexican transactions must be done in Spanish. Many lending institutions in Mexico deal with Americans on a regular basis, mostly in Guadalajara, where more Americans have retired to or maintain a summer home.

Buyers interested in buying a home outside the United States to retire to may have to pay both U.S. and foreign residence taxes. Most often the Internal Revenue Service will allow the buyers to deduct any foreign taxes paid from what is owed in the United States. All tax matters regarding foreign properties are best left to the experienced tax preparer or personal financial advisor before making any decisions to buy property outside of the U.S.

If you are a first time homebuyer or are in the low to moderate income range, buying a home listed through the Department of Housing and Urban Development (HUD) is an appealing option.  HUD homes are actually available to anyone who can qualify for a mortgage. Although they are popular with lower income families, they are also appropriate for savvy consumers looking for a great deal.  HUD also has special purchase programs for educators and law enforcement officers, which may qualify them for discounts up to 50%. 

If you have fallen on hard times or have less than stellar credit, you may still be able to purchase a home with government assistance.  There are several government programs available to those in need. You can go over your alternatives with a HUD funded housing counseling agency. 

In order to find a HUD home, go to your state’s HUD website.  You will be able to browse the available homes.  When you find a home you like, you should find a HUD approved real estate office to show you the property.  The agency’s website will have a list of approved offices.  Contact them so that they can set you up with an agent.  When you meet with an agent, the process is much like buying any home.  You want to lay out your wants and needs so that the agent knows what you are looking for in a home.  Pictures may not be enough to base your decision on, so you need to have an open dialogue with the agent.

The home buying process is a little different for HUD homes than it is for a regular listing.  If a homeowner with a HUD insured mortgage cannot make the payments, the home is auctioned off after the lender forecloses.  HUD pays the lender for what is owed on the property and takes ownership of the home.  These homes are sometimes auctioned off for less than the appraised market value.  This is why such great deals can be found on HUD homes.  The auction is considered the “offer period”.  Everyone places their bids and the highest bidder gets the house.  You can submit a bid at any time if the house isn’t sold in the offer period.  If HUD approves your bid, your agent will be contacted within 48 hours. 

In the event that your bid wins, your agent will help you with the paperwork. Your settlement date will usually fall within 30-60 days of your winning bid.  It is important to remember that you cannot finance a home through HUD. You need to have your own financing arrangements.  Have everything ready to go at the time you place your bid.   If your bid wins, but you do not close, you may lose your deposit. 

If the home is in need of repairs, the responsibility falls on the buyer.  HUD homes are sold “as is” and do not come with a warranty. HUD will not make the repairs because the price of the home is always adjusted downward to reflect the cost of repairs.  Don’t consider buying a HUD home unless you are willing to absorb the cost of repairs.  The repairs might be minor, so don’t turn your back on good home because it needs a little work.  Before looking for homes, you should determine what your repair threshold is and stick to that.  Some like the challenge of it and others would prefer to keep repairs to a minimum.  It is important to have the home inspected prior to making an offer so that you can figure the cost of repairs into your bid.

If you are purchasing a HUD home for real estate investing, you should be aware that you cannot bid during the initial offering.  Families in need of housing take priority; therefore, the initial offering is only available to buyers with the intent to live in the home.  If no one bids on the home, investors can then place their bids.

If a foreclosure cannot be sold within 6 months, HUD will then sell them to charities or agencies for the purpose of providing housing for needy families.  Either way, the homes are likely going to those individuals that need them the most. 

Buying a home can be one of the biggest and most important investments you can make. The process of buying the home that you want can be a long and tedious process, taking up most of your time. It’s up to you, as the consumer, to ask any questions, pay attention to details and to learn about the real estate market in the area in which you intend to buy.

Step One

You must know what your wants and needs are before embarking on the long journey of house hunting. Taking a piece of paper, sit down and write down all the features that are most important to you:

Are you looking for a house in a specific city, neighborhood or school district?

How many bedrooms and bathrooms do you want or need?

Do you want off street parking, or a one or two car garage?

If you operate a home based business, are there any restrictions in the area you intend to buy in?

Do you want a finished basement or attic space?

Do you want a ranch style home or two story house?

Do you want a central air unit?

Do your want a furnace or a boiler for heat?

Now, on a separate piece of paper, write down all the features that you absolutely do not want in a house:

Living in a congested part of town.

Living next to an airport, train station or highway.

A home that is in great need of repair.

A home with too many stairs.

Keep this list in mind as you look at houses. This list may also change from time to time as you look at houses. You may choose to add or remove certain features you do not want or are willing to make compromises on. Don’t be disappointed if you can not find the “perfect” home. Most homes do not come “perfect,” they can only be made that way through time and patience.

Step Two

Before you begin looking at properties, you will need to get your finances in order. This will be a good time to review your credit report and possibly clean it up a bit to improve your credit score. It’s important to check your credit report to make sure there are no discrepancies. Any past due amounts should be paid in full or most companies will be willing to negotiate a settlement price to close the debt.

For example: If you have a past due credit card debt you no longer use and that has been entered into collections at an amount of $900. You may be able to offer the company a settlement of $500 to settle that debt and have the debt stricken from your records. Before paying this settlement, have this agreement in writing. Be sure to keep all of the receipts to the items you settle on your credit report because it may take weeks or even months for the settled debt to be removed from your credit report.

Step Three

Now decide what kind of property you are interested in buying. Are you interested in a HUD, foreclosure, real estate or for sale by owner property? There are many web sites on line where you can find homes by city, state, or price range. On these sites, you can see the picture of the home, many with virtual tours, and review the listing features and details.

Step Four

Now is the time to find a lender and get pre-approved for the loan. This will give you a better understanding of what price range you can look into. Being pre-approved also serves a great advantage for when you find the home that you want, so that you can move ahead and place an offer on the house without having to wait on a pre-approval while someone else steps in and takes the house right from under you.

Lenders may offer special programs on loans, such as the FHA or Ameri-Dream, that can save you extra money in the closing process. Before deciding on a loan, ask the lender about any of these special programs and what would work to your advantage.

Step Five

Most first time home buyers prefer to work closely with a reputable real estate agent, regardless of the type of property you wish to buy. Real estate agents are very knowledgeable and can give you many helpful tips and information that can benefit you. They are also great negotiators and will help explain the complicated paperwork involved when placing an offer on the house or when closing a deal. Be certain that your real estate agent is working for you as the buyer and not for the seller of the house you would like to purchase. This can lead to a conflict of interests and cause many problems.

Choosing a real estate agent to work with should take more than picking a number out of the phone book. Talk to your friends and neighbors and ask them for any recommendations. You should only work with an agent you feel comfortable with.

You’re ready to take that big step. You have enough in your savings for a down payment and you’ve decided it’s finally time to own your home. Buying a home is a complicated and even frustrating experience for everyone, but for first time buyers there is all sorts of added pressure. Just remember that veteran home buyers face the same concerns and confusion that you do – it’s just they have a little bit more experience coping with that pressure.

Here are a few tips if you’re just starting out in the property game.

Check Your Finances

You want to make sure that your finances are in order and that you have enough money to proceed with your dream of owning your own home. It is important that you take a look at your credit history before you apply for a mortgage so that you can clear up any mistakes or irregularities. You also want to have a good idea of what you can afford before looking at properties. You only want to look at homes that are within your budget and knowing what you can realistically afford before you start looking and sticking to that budget may save a lot of disappointment down the road.

Do Your Research

Before you begin house shopping, you need to know what you’re looking for. You need to know what kind of house and area you want to live in. Prepare a list of questions that you could yourself when looking at a potential property. These questions might include:

Is the neighborhood safe?

Is the house big enough for our needs now and in the near future?

Are there schools?

Is it close to work? If not, how much time will I spend commuting?

Is there public transportation?

What condition is the house in? What repairs will I have to make right off the bat?

What about re-sale value? Will I be able to make some money when I sell the house in a few years?

If you are planning on applying for a mortgage, you’ll also want to do some research on the different types and terms of mortgages that would be available to you.

Find the Right Real Estate Agent

Whether you’re buying or selling, it’s important you also do your research where a real estate agent is concerned. A good real estate agent will be knowledgeable of the housing market in the area you’re looking in and he or she will be able to answer most if not all of the questions you have about this process. It is important to build a strong relationship right from the start – it will make things much easier down the line. You’ll want to make sure that you find an agent that will keep your best interests (not the sellers or the agent’s own interests) first.

Put that Offer In

This can be a difficult part of the process for both the buyer and the seller. The buyer does not want to overpay or go beyond his or her budget, but at the same time token a seller does not want to give away the home. There are other factors to consider, especially a contract that outline what will and will not be included in the home (i.e. appliances).

Home Inspection

In some places this inspection occurs before you sign the final deal, while in others it is after it is finalized. This is an important step – you want to know exactly what you’re getting yourself in to when purchasing a home. If there are problems with the home, you want to know that right off the bat, not a few months down the road.

Closing the Deal

Closing (also referred to as settlement) is when the ownership of the property is transferred to you (the buyer).

What about buyer’s remorse? A lot of people experience it. You love your home when first see it and you can’t wait to move in, but once there you begin to have your doubts. Did I pay too much? Can I afford to do this? Is this really the perfect house or should I have held out a bit longer to see if anything else came on the market? These thoughts go through the minds of almost anyone who has bought a home at some point, but they can certainly be overwhelming for the first time home buyer. Just trust your instincts and try to remember what made you fall in love with the house in the first place!

Buying a home represents the most significant financial decision most people will ever make during their lifetime. From a person’s first home, which often establishes the foundation for future home purchases, to the purchase of the home where they’ll spend their senior years, there are definite pitfalls to avoid and suggested steps to take to assist one in making the right decisions.

One of the first mistakes people make is not getting pre-approved or pre-qualified by a bank or lending institution. Sellers and their agents are often skeptical of a prospective buyer’s ability to obtain a mortgage loan when the buyer has not been pre-qualified. When choosing between two comparable offers, or when contemplating countering a buyer’s offer, a seller will always look more favorably upon the pre-qualified buyer.

Employing the services of a realtor makes great sense, since navigating through the home purchase process is both complex and fraught with financial dangers. However, as the buyer, you should have your own realtor who will be fully committed to representing your best interests. The seller’s realtor will often favor the interests of the seller, with an eye to the commission involved. Your agent will be inclined to do a “comparative market analysis”, which will establish property values and selling prices of homes in the area of your targeted purchase.

Take your time! It happens all too frequently that people rush into signing a contract to purchase a particular home and then for any number of reasons, regret their hasty decision. Remember… if you enter into a contract to buy a home, your chances of rescinding that contract are very slim. It doesn’t help that you’ve found another home you prefer, when you’re under contract to make a purchase you’re expected to follow through and buy it.

In addition to finding a home they like better than the one they’ve contracted to buy, another reason people try to cancel a contract is that they realize too late that they’ve over-purchased. The mere fact that you can qualify to purchase a particular property doesn’t speak the full story. Being “house poor” is the pits. Putting the bulk of your earnings into your mortgage payment obviously detracts from your quality of life. Things you used to enjoy, such as vacation trips, going out to dinner or splurging on an expensive piece of clothing will have to be curtailed.

Some people have specific requirements for their dream home and unfortunately sometimes wait too long for that home to present itself. While waiting for utopia, people pass up excellent homes that are good bargains and would fulfill a majority of their demands. Also, in many cases, market prices and mortgage rates continue to rise.

The potential buyer should be aware that there are many types of mortgages being offered by lenders; therefore, they should explore all of their options before “locking in.” Interest only loans allow the buyer to pay only the interest on their mortgage for a period of usually up to five years. This is an attractive option for young buyers who want to establish themselves in a home of their own, but have not reached their full earning potential. Hopefully and assumedly, at the end of the prescribed 1-5 year period the buyers will be better able to meet full mortgage payments. All other options should be explored as well.

Failing to require a comprehensive home inspection, or relying on the knowledge of a friend, is a penny-wise/pound-foolish thing to do. The relatively minor expense of the full inspection is definitely cost-effective. The inspection should include a review of electrical system, condition of the roof, plumbing, heating and air conditioning, septic system, water quality, etc. etc. etc. This is a very important process that can save untold heartache in the future.

When selecting a home, don’t forget that your quality of life in that home extends into the surrounding community. Your new home can be a showplace, but if it’s surrounded by run down properties and neighbors who don’t fit into your preferred social structure, you aren’t going to be happy. Be sure that the school system meets with your approval; inquire about the crime rate and consider the quality of the stores and services available in the area.

Sometimes it’s hard to look into the future, but when buying a home it’s good to think about resale value. Not that this should be the final consideration, but when touring your prospective new home you should look for things that would be a deterrent to another buyer.

Finally, before signing the contract you should be aware of any restrictions imposed by your new community association. Such restrictions can include: fencing guidelines, parking restrictions (no RV’s in the driveway), no boats in the yard, landscaping requirements, and even certain occupancy restrictions. Blindly buying into a heavily restricted community is a very common mistake.

The ten common buying errors mentioned here are by no means an exhaustive list of things to avoid. Buying a home should be done systematically and carefully. Checklists are available from reputable realtors and should be consulted and utilized throughout the searching and buying process.