Source: The Tico Times
Date: July 27, 2007
Special Edition: Real Estate and Construction
Writter: Mike Faulk
If you thought the language on a loan contract was hard to read back home, imagine examining one in Spanish. It's a pain to deal with all the paperwork and financial details that go into securing a home loan, and being in another country doesn't make it any easier. So the first and most important step you should take in securing a loan is to find someone in the industry who knows what he or she is doing.
Any of the well-recognized banks in Costa Rica would be a loan hunter's best bet, but their Costa Rica real estate services vary widely. Most banks require residency in the country to take out a loan to purchase Costa Rica real estate, but a number of them don't. The banks that don't require residency include Banco Nacional, Scotiabank, Banca Promérica, Banco Cuscatlán, BAC San José and Banco Improsa.
Violeta Fernández, a corporate relations representative for Banco Nacional, said the best way to apply for a loan is to approach any of its agencies or branches. She said the bank can manage credit directly there.
Fernández said foreigners can easily make mistakes when trying to take out a loan to purchase real estate in Costa Rica. For example, she said U.S. citizens sometimes forget to provide tax forms certified by the U.S. Internal Revenue Service. People of other nationalities must certify their income with an authorized public accountant from their home country, and the Costa Rican consul in that country must certify that the accountant exists. This latter certification must be authenticated by the Foreign Ministry in Costa Rica to verify that the signature of the consul is authentic. Fernández said foreigners should try to be patient when applying for a loan from a state bank. Like most everything in Costa Rica, it can take time and require presentation of a number of personal documents and more paperwork, thanks to bureaucracy. "They must understand that the requirements are part of other requirements set forth by local banking legislation", Fernández said. Another common mistake for foreigners is comparing the level of active rates for loans for bargain real estate in Costa Rica to those of their native country, she added.
Most banks here offer loans in colones or dollars. Financing can vary greatly among bakns, though may offer 70-80% of the appraisal. Banco de Costa Rica (287-9154, www.bancobcr.com) will finance as much as 95% of the appraisal.
With terms ranging from 15 to 30 years, interest rates for U.S. dollars vary from about 7-10%. Rates for loans in colones have dropped considerably since the implementation of the floating currency exchange rate, and presently range from about 9-12%. Additional costs include commissions, legal fees and appraisal fees.
When considering what property taxes will be like on your new home, Fernández said it's best to consult the local government from where you'll be buying, since taxes vary from one municipality to the next in Costa Rica.
Requirements for Getting a Bank Loan*
*The information below is subject to change. Interest rates may vary depending on the currect U.S. prime rate, the LIBOR and the Central Bank rate. For more information or up-to-date rates, call your local bank branch.
* BAC San José//295-9595//bancosanjose.com o CURRENCY:
# Colones and dollars o AMOUNT:
# $10,0000 - $400,000
o FINANCING:
# 80% o TERM:
# 15-20 years
o INTEREST RATE(changes frequently):
# Colones: Base rate + 4 points
# Dollars: LIBOR three months + 4 points, 7% base
o OTHER EXPENSES:
# Appraisal; house insurance; life insurance; legal fees o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# Copies IDs; proof of salary; proof of Social Security; proof of debts; bank statements; business statements o OTHER REQUIREMENTS:
# Proof that debtor lives in country; proof that mortgagor receives money in the country
* Banca Promérica//519-8000//promerica.fi.cr
o CURRENCY:
# Dollars
o AMOUNT:
# $50,000 - 75% of property value
o FINANCING:
# 80% for appraisal
o TERM:
# 25 years
o INTEREST RATE(changes frequently):
# First five years, prime rate + 1 = 9.25%, then prime + 1.25% = 9.75%
o OTHER EXPENSES:
# Legal fees; appraisal costs
o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# Copies IDs; proof of salary for last six months; if a business owner, last three income tax returns, W-2 forms, municipality bills o OTHER REQUIREMENTS:
# Construction plans; banks statements from other institutions; cadastre certified by National Property Registry
* Banco Cathay//242-0892//bancocathay.com
o CURRENCY:
# Dollars
o AMOUNT:
# $50,000 - $500,000
o FINANCING:
# 70%
o TERM:
# 15 years
o INTEREST RATE(changes frequently):
# 10% annual, plus annual 1% bank commission
o OTHER EXPENSES:
# Insurances legal fees, appraisal costs o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Appraisal paid; completed loan form; copy of residency ID o OTHER REQUIREMENTS:
# Copy of electricity bill; debts certificate; proof of debt from other banks, cadastre certified by National Property
* Banco Cuscatlán//299-0200//bancocuscatlan.com
o CURRENCY:
# Dollars
o AMOUNT:
# Depends on credit analysis
o FINANCING:
# 70% of appraisal
o TERM:
# 20 years
o INTEREST RATE(changes frequently):
# Base rate 8%, LIBOR 6 months + 3.75 points (9.12%); LIBOR 6 months + 3.73 points (10.10%) o OTHER EXPENSES:
# Bank commission 2-3.5%; appraisal according to property value; legal fees; administration fees o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# For U.S. citizens, Canadians, Puerto Ricans and citizens for Virgin Islands: Social Security Number; universal Credit form;bank statements from last six months; purchase option; business owners must present tax payments from last two years; financial statements; proof of salary certified by Costa Rica consul in country of origin and by Foreign Ministry
o OTHER REQUIREMENTS:
# Cadastre
* Banco de Costa Rica//287-9154, 221-7638//bancobcr.com
o CURRENCY: # Colones and dollars
o AMOUNT:
# Colones: equivalent of $1,000 minimum up to payment capacity
# Dollars: $50,000 up to payment capacity
o FINANCING:
# Colones: 70% of appraisal
# Dollars: 95% of appraisal
o TERM:
# 25 years
o INTEREST RATE(changes frequently):
# Colones: First two years, 11% fixed rate, then base rate + 4.75%, variable and adjustable monthly
# Dollars: First three years, 8.25% fixed rate, then prime rate for rest of them
o OTHER EXPENSES:
# Insurance, legal fees, appraisal costs
o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Purchase option; construction budget; plans and permits; copies of mortgagor and guarantor IDs; proof of salary given by a supervisor or certified by a public accountant; proof of debts; martial status certificate
o OTHER REQUIREMENTS:
# Cadastre certified by the national property registry; construction plans; taxes paid; up-to-date municipal payments
* Banco Improsa//284-4113//grupoimprosa.com
o CURRENCY:
# Dollars
o AMOUNT:
# $35,000-$60,000
o FINANCING:
# 75%
o TERM:
# 20 years o INTEREST RATE(changes frequently):
# Depends on debtor's credit rating
o OTHER EXPENSES:
# Legal fees; appraisal; tittle guarantee; life and fire insurance o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# Copies of all paper of passport; completed form; authorization for bank to request bank references; bank reference from U.S. or Canada; proof of salary; bank statements from last three months
o OTHER REQUIREMENTS:
# U.S. or Canada citizen
* Banco Nacional//211-7000//bncr.fi.cr
o CURRENCY:
# Dollars
o AMOUNT:
# Over $800,000
# $400,000-$800,000
# Up to $400,000
o FINANCING:
# 50%
# 60%
# 70%
o TERM: 20 years
o INTEREST RATE(changes frequently):
# Annual rate:
* 7.40% = LIBOR + 2.00 = 1-12 months
* 7.60% = LIBOR + 2.25 = 13-36 months
# Review and rate adjustment monthly:
* 7.85% = LIBOR + 2.50 = 37-60 months
* 8.10% = LIBOR + 2.75 = 61-96 months
* 8.60% = LIBOR + 3.50 = 97-240 months
o OTHER EXPENSES:
# 2.5-7.5%, includes commissions, legal fees, files, insurance
o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# The following requirements apply for U.S. citizens: authorization form; Earnest Money Contract (executed by buyer and seller); copy of passport (borrower and co-borrower); Uniform Residential Loan Application, completed and signed by all parties; W-2 forms from past two years (signed and dated); original bank statements and/or brokerage account statements from past three months; Know Your Customer form; corporate/partnership tax returns with all schedules attached for past two years(signed and dated); profit and loss statement for year to date(signed and dated); balance sheet fro year to date(signed and dated); certification of municipal taxes and lands (must be up-to-date); copy of plano catastral (registered survey map); ACH form(Automated Clearing House)
o OTHER REQUIREMENTS:
# None
* Banco Popular//211-7000//bancopopularcr.com
o CURRENCY:
# Colones and dollars
o AMOUNT:
# Colones: $300,00 maximun
# Dollars: $15,000-$300,000
o FINANCING:
# 80%
o TERM:
# Colones: 30 years
# Dollars: 25 years
o INTEREST RATE(changes frequently):
# Colones: First year, 7.25% annual (Central Bank base rate); second year, base rate + 2 points; third year, base rate + 4 points; subsequent years, base rate + 5 points
# Dollars: 7% for wages in dollars; 7,5% for non-dollar wages
o OTHER EXPENSES:
# Legal and administrative fees for loans over ¡ 15,000,000
o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Purchase option; cadastre (property map) certified by the National Property Registry; municipal permits; copies of mortgagor IDs; proof of salary or wage certificate signed by a public accountant; proof of debts; copy of a utility bill indicating the debtor's current address
o OTHER REQUIREMENTS:
# Loans in dollars are given only to people who earn income in dollars as certified by a public accountant; debtor's must be over 18 and demonstrate a fixed income and the financial ability to pay off the debt
* Bancrédito(Banco Crédito Agricola de Cartago)//550-5000//bancreditocr.com
o CURRENCY:
# Colones and dollars
o AMOUNT:
# $500 - $250,000
o FINANCING:
# Colones: 80% of appraisal
# Dollars: 75% of appraisal
o TERM:
# Colones: 25 years
# Dolllars: 20 years
o INTEREST RATE(changes frequently):
# Colones: First year, Central Bank base rate + 2 points; second year, base rate + 3 points; third year, base rate 3.25 points; fourth year, base rate + 4 points, until loan is paid.
# Dollars: 8.25% base rate
o OTHER EXPENSES:
# 2% commission
o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Proof of salary; proof of Social Security; copies of IDs; property certificate; cadastre certified by National Property Registry; construction plans; taxes paid; property certificate; copies of electric bills; purchase option; proof of debts
o OTHER REQUIREMENTS:
# Purchase option; building budget plans with permits; cadastre certified by National Property Registry; municipal permits; photocopies of mortgagor and guarantor's IDs; municipal taxes; lie insurance and medical test; signed authorization for bank to get credit information from Superintendence of Financial Entities (SUGEF)
* BANEX//287-1111//banex.fi.cr
o CURRENCY:
# Dollars
o AMOUNT:
# $50,000 up to payment capacity
o FINANCING:
# 75-80% of appraisal
o TERM:
# 25 years
o INTEREST RATE(changes frequently):
# 8%
o OTHER EXPENSES:
# Legal expenses; down payment; bank commission; insurance; appraisal; tittle guarantee
o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Copies of IDs; proof of salary or certificate of income issued by a certified public accountant; cadastre; taxes-paid certificate from municipality; proof of Social Security
o OTHER REQUIREMENTS:
# Plans; construction budget; payment of appraisal; completed bank forms; bank statements; life insurance; medical tests
* Mutual Alajuela//437-1000//mutualalajuela.com
o CURRENCY:
# Colones and dollars
o AMOUNT:
# ¡ 500,000 up to payment capacity
o FINANCING:
# 90%
o TERM:
# 15 years
o INTEREST RATE(changes frequently):
# Dollars: 9%
# Colones: 11.75%
o OTHER EXPENSES:
# Legal fees; appraisals; amount depends on loan amount, approx. 10%
o RESIDENCY REQUIRED?:
# Yes
o DOCUMENTS:
# Copies of IDs; proof of salary; proof of Social Security Number; last three statements from other banks; proof of debts; municipal taxes paid; cadastre; construction budget; plans
o OTHER REQUIREMENTS:
# Life insurance; fire insurance and natural disaster insurance; demonstrate the debtor will use the property as a residence; statement of debtor's activities in Costa Rica.
* Scotiabank//287-8751//scotiabankcr.com
o CURRENCY:
# Colones and dollars
o AMOUNT:
# $200,000 maximum
o FINANCING:
# Colones: 90%
# Dollars: 80%
o TERM:
# 30 years
o INTEREST RATE(changes frequently):
# Colones: 9.25 fixed rate for 36 months, with adjustment of passive rate according to Central Bank, plus 4.5%
# Dollars: 7.75% fixed rate for 36 months, then adjustment of prime rate plus 0.75%
o OTHER EXPENSES:
# Legal fees, appraisal, bank commission
o RESIDENCY REQUIRED?:
# No
o DOCUMENTS:
# Proof of last three salary payments: Social Security Number; proof of dept from other banks from last two years; two IDs for non-residents, one for residents
o OTHER REQUIREMENTS:
# None