With the recent meteoric rise of the Canadian “Loonie” to above parity with the US dollar recently, Canadians are enjoying an experience that might come along just once in a lifetime.
Canadians represent one of the largest group of foreign buyers in the US,
with a particularly high percentage in Florida, Arizona, and Las Vegas.
Considering that home prices in many of these states have fallen between 35% and as much as 65%, and tack on another 20-25% in “savings” due to a strong dollar, it becomes clear pretty quickly why there is so much interest.
A recent poll determined that 1 in 5 Canadians is considering buying a US property at the moment. Cash sales are the norm, especially where you are expecting a major discount from the original peak value. That being said, buying a property in one of these areas has never been more difficult with loopholes and red tape galore.
Most professionals will advise you that its best to prepare to buy on a cash basis, and after any renovation or rehab work (if applicable) trying to refinance and pull some equity out afterward. Since most people don’t have between $100,000 and $500,000 lying around … many Canadians are taking out a home equity line of credit or one of the other types of home equity loans against their Canadian property and using those funds to buy.
This isn’t the only way to finance such a purchase however.
When considering the complexities of cross-border property ownership and financing, the term “Caveat Emptor” probably never held more true. If you are considering a buying south of the border, be sure to discuss your financing requirements with a senior mortgage broker first. Only a very small segment of the mortgage or banking community really has any true expertise or connections to help facilitate such a deal.
