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Guide on How Canadians Can Purchase a Property in the USA

Matt Thompson Oct 5, 2019
Buying a property in the U.S. can be overwhelming, especially when you don't understand the rules. Many Canadians have paid hefty charges for handling transactions the wrong way, necessitating the need for well-established guidelines.
Today, many Canadians are investing in U.S. real estate by buying condos or homes for vacation. In 2015, you would find over 500,000 Canadians owning property in Florida, according to a survey report by the Bank of Montreal.

What if you are a first-time homebuyer in the United States? If you’re Canadian planning to purchase a property in the U.S., it's essential to research more about the U.S. real estate market. That will help you streamline the purchase process while minimizing costs.

Tips for Purchasing Property (Real Estate) in the United States

As you search online for an agency to take you through the purchase process, you would find thousands of options. It's imperative to gain invaluable information regarding the U.S. real estate market. In this guide, we explore the best property search tips and options in the U.S. real estate. To get the best real estate deal, here are the steps to follow.

Select a Suitable Location

The suitability of a location to fulfill your needs will provoke your interest in buying a property in that particular place. If you are escaping the Canadian cold winters, you can choose the U.S. locations with warm weather conditions, such as Florida. Before selecting a place, think about your lifestyle, hobbies, and interests.

Establish an Effective Financing Plan

You should determine if you would use cash or other options like the U.S. mortgage. If you resolve to use the mortgage financing option, it will be wise to work with a mortgage broker to help you find the best deals in the United States.

U.S. Mortgages

Securing a mortgage from an American bank can be challenging for most Canadians. All American banks will ask you to provide much more documentation than the Canadian banks. That’s because they may not understand the features of Canadian documents.
Unlike in Canada, mortgage application in the USA is lengthy and highly regulated. It might take up to 45 days to secure mortgages in a U.S. bank, from the date of application to closing. In the United States, the mortgage interests get compounded monthly, unlike in Canada, which gets compounded semi-annually.
It is no doubt that U.S. banks require higher down payments for non-US citizens. In most cases, before you acquire a mortgage, they would want you to have a down payment of 40 percent. However, you can get the best mortgage deal if you saved enough money.
If you resolve to transfer the Canadian funds to the United States for the down payment, you should get the best exchange rates. In Toronto, you can find the best currency exchange Toronto services at Knightsbridge Foreign Exchange.

Work with Professional Real Estate Agents

Most people presume that the Canadian and U.S. real estate laws are similar, they are not. As a Canadian, you may not get the regulations of real estate in the USA, so you need an experienced local real estate agent. Professional real estate agents who understand the location of interest will consistently provide you updates and new home listings.

Evaluate the Costs of Property Purchase

Regardless of the property’s location, you’ll incur various expenses, including the closing costs and professional fees. Besides the purchasing costs, you'll always be paying some of the third-party expenses. They include homeowner’s insurance, mortgage payments, utility costs, community fees, taxes, security costs, traveling expenses, and maintenance fees.

Review Your Residency and Taxes

As a Canadian, you may not stay in the United States for long as you wish. You can only stay in the country for not more than 182 days in a year. If you spend over 182 days (six months) in the United States, you may have to pay taxes like any other U.S. citizen.
If you don’t understand the U.S. tax regulations, you should consult a local tax preparer to get informed about the tax deductions you should pay. The tax preparer will also help you find the best ways to monetize your U.S. home.

Final Words

When exploring the U.S. real estate market, you need to consider all the factors mentioned above. Besides saving for the down payment, consider budgeting for extra costs. Alternatively, you can rent a house, but end up paying between the U.S. $10,000 and $15,000 in six months.