A lot of people wonder if it makes sense to buy a house in the United States while on an L1 visa. After all, an L1 visa is only a temporary work visa, so why make such a big investment?
If you’re confused and looking for reasons to invest in residential real estate in the US, look no further! In this article, we have listed the Top 10 reasons for you to buy a house on an L1 Visa. We also share the associated risks you could possibly face so that you can make an informed decision.
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Home Ownership on Residency Status
One thing to keep in mind is that one’s residency status has a significant impact on the requirements for obtaining a home loan. The majority of debtors typically belong to one of the following categories:
- Green card holders who are residents for life (Form I-551)
- Non-permanent occupants who possess a working visa (E1, E2, H1B, H2A, H2B, H3, L1, and G1-G4)
- “Foreign nationals” who don’t live in the United States on a regular basis.
In general, if you fit into one of the first two groups, getting a home loan is simpler. That’s because mortgage behemoths Fannie Mae and Freddie Mac, which purchase the majority of mortgages on the secondary market, have policies that are essentially the same for people with work permits and green cards as for everyone else.
The lender must confirm the applicant’s legal residency, which is the key restriction. However, because foreigners don’t meet Fannie or Freddie’s requirements, lenders must continue to hold onto these loans. This method involves the bank taking on more risk. Therefore, a sizable down payment is more likely to be needed.
Reasons to Buy A House on L1 Visa (Pros)
While there are a variety of other non-immigrant work visas available, the L-1 visa offers many advantages that make it a desirable option for those who are eligible. Hence, these benefits are a key reason to get a home in the US on an L1 visa!
1. Purchasing a Home can Assist You in Putting Down Roots in the US.
One of the most important purchases you will make in your lifetime is buying a primary residence. It is not only a financial investment, but it also enables you to establish roots in a neighborhood. You feel more secure and like a part of the family when you own home away from your home country.
When you purchase a home, you integrate yourself into the community. Both you and your neighbors become acquainted with one another. If you are new to the country, this sense of community may be very significant.
You can feel more at home in the US if you establish roots in a community. It can give you a support system as you adjust to life in a new country. Moreover, you’ll be able to enjoy an enhanced quality of life in the US.
2. Mortgage Payments on a Monthly Basis may be Less Expensive than Rent.
There are several compelling reasons to invest in a US home. For starters, your mortgage’s monthly payment will probably be less each month than your rent. Compared to other major real estate markets like Canada, the UK, China, etc., house prices in the US are significantly lower. On the other hand, rental yields are high, and rent payments may be higher than mortgage payments. Additionally, even if your EMIs are a little higher, you are building equity in your home with each payment. Finally, having a house of your own might provide you with a sense of security and stability that renting cannot.
3. Compared to Rent Payments, Mortgage Payments are Less Likely to Change.
A mortgage is a type of financing used to buy real estate. Typically, the monthly payments are fixed, so they won’t change. As a result, homeowners will have peace of mind knowing how much their monthly mortgage payment will be. In contrast, depending on the lease arrangement, rent payments can frequently change. Renters may find it challenging to organize their finances as a result. Renting instead of buying a home while on an L1 visa is, therefore, the better option.
4. You may be Able to Deduct Mortgage Interest and Property Taxes When you File your Taxes.
If you itemize your deductions, you may be able to deduct your mortgage interest and property taxes when you file your US federal income tax return. The amount of money you save on your taxes can help offset the cost of ownership. You should, however, consult with a tax advisor to see if you are eligible for this deduction.
5. Housing Costs are Reasonable in the US.
Compared to other nations, US home prices are extremely reasonable. The average cost of a property in the US is about $200,000, whereas it costs over $1 million in London. For families searching for a home that is both reasonable and pleasant, this makes the US a perfect area to buy a house.
6. If your Credit Score is High, You Can Get a Loan with a Reduced Interest Rate.
You may qualify for a loan with a cheaper interest rate if you have a high US credit score. This is due to the fact that lenders consider borrowers with established credit ratings to be less risky. They are more likely to make timely, full loan repayments. Due to the lender’s ability to offer them a reduced interest rate, you may be able to save money. So, if you have established solid US credit, you can simply obtain a mortgage loan to purchase your home and an asset that will appreciate in value.
L1 Visa Mortgage with no US Credit
If you just came to the US and have no US credit, you can still get a mortgage on L1 visa for your home. You just need to find the right lender who provides mortgages to L1 visa holders with no US credit history.
Pre-qualify for a US mortgage as an international buyer.
No US credit history needed.
7. Increase your Home’s Equity.
You might be able to use your home as collateral for a loan if it is yours. This implies that the lender may seize your home if you default on the loan. On the other hand, you can increase your home’s equity if you make all of your payments on time. Equity, which is the difference between your home’s market worth and the sum you still owe on your mortgage, is the piece of your house that you truly own. Future loans that you obtain may have cheaper interest rates and better terms if you use this equity as collateral.
8. You Can Make Changes to your House.
You may be able to change the physical appearance of your house to better suit your needs if you own it. For example, you might want to paint the walls or add a new bathroom. If you are renting, on the other hand, you will need to get permission from your landlord before making any changes. They may also charge you a fee for doing so.
9. A Certain Method for L1 Visa Holders to Increase Their Wealth.
Purchasing a house is a great way for L1 visa holders to increase their money. Over time, the value of your home is likely to increase. This is due to market conditions, as well as any improvements that you make to the property. When you are ready to sell, you may be able to sell your home for more than what you paid for it, earning a profit in the process.
In the last five years, the average price of a home in the United States has increased by over 46 percent, from $208,000 in August 2016 to $304,000 in August 2021, and will increase by another 12.4 percent to $335,000 by July 2022.
Therefore, in accordance with predicted home value forecasts, if an L1 visa holder bought a home for $500,000 in July 2016, the property’s worth would have increased to almost $800,000 by July 2022.
For those with an L1 visa, now is the ideal time to make an investment in real estate. You can profit from the increase in property value when you sell it, and it also creates equity that can be utilized as security for further investments.
10. Purchasing a Home Can be a Sensible Investment If You Intend to Obtain Green Card in the US.
Owning a house in the United States has several advantages, particularly if you want to stay there for an extended period of time. If you want to obtain a green card, owning a house can give you an advantage over individuals who do not own property. This is because the US government views homeownership as evidence of ties to the United States.
Having a home of your own can also give you security and stability, and it can also be a smart financial investment. Over time, the value of your home can increase, and by reducing your mortgage, you might also create equity. Additionally, house ownership may qualify you for tax benefits that renting does not. Consequently, purchasing a home on your L1 visa is a good move if you intend to become a permanent resident of the US.
Make sure to consult with a professional before making any decisions. Ultimately, the decision of whether or not to buy a house in the US while on an L1 visa is a personal one. You’ll need to consider your unique circumstances and whether or not ownership makes sense for you.
Cons of Buying a House on L1 Visa
1. You Might Not Have the Necessary Time to Fully Enjoy Your Home.
If you are transferred back to your country or need to leave the United States for any other reason, you may not have the opportunity to enjoy your home as much as you would like. You also run the risk of being unable to sell your property quickly if you need to return home suddenly.
To avoid problems, a collateral plan should be prepared, in which case, you may construct a roadmap detailing how the property would be handled if an emergency arises. For example, you may ask a friend or family member to take over the mortgage payments or sell the house and split the proceeds with them. Renting out the home is another option; you might also sell it or allow friends and relatives to use it.
2. You Might have Difficulty Qualifying for a Mortgage.
Mortgages can be difficult to obtain, even for US citizens. As an L1 visa holder, you may have an even harder time qualifying for a loan. This is because lenders view you as higher risk since you are not a permanent resident of the United States. You may need to have a larger down payment, a co-signer, or a higher credit score in order to qualify for a loan.
HomeAbroad can help you connect with lenders that offer loans to L1 visa holders and can help you get the mortgage easily, even if you are a newcomer with no US Credit History.
3. Job Loss Can Affect Your Loan Repayment
The risk of losing one’s employment when purchasing a home on an L1 is one of the most significant drawbacks. If you were to lose your job, you’d have to deal with both finding a new position and paying off your mortgage.
If you want to keep your home but are having trouble making the mortgage, you may ask your lender for a longer loan term, which will bring down your monthly payment.
4. Difficulty in Managing Property Remotely
It can be difficult to manage your property remotely if you are not in the United States. If you are not able to be on-site to manage repairs, renovations, or other issues that may arise.
However, a property management company will take care of all the details of your property, from finding tenants to handling repairs.
Can You Get a Mortgage Loan on L1 Visa?
Yes, you can get a mortgage loan on an L1 visa. You may be able to get a loan from a traditional lender, such as a bank, or you may need to go through a foreign national mortgage lender. The process and requirements will vary depending on the type of lender you use.
The mortgage industry in the US is constantly changing, making it hard for international buyers to obtain a loan. However, if you are looking to purchase a property in the near future, you should start investigating your mortgage options. There are a few ways to qualify for a loan as an L1 visa holder.
When applying for a mortgage loan on an L1 visa, you will likely need to provide documentation that proves your employment status and income. You may also be required to have a higher credit score and down payment than those who are applying for a loan with a green card or US citizenship. However, the requirements will vary depending on the lender you use.
It is important to shop around and compare different lenders when you are looking for a mortgage loan on an L1 visa. Be sure to compare interest rates, fees, and terms and conditions before you decide on a loan.
HomeAbroad is a one-stop shop that offers information and resources for those who are looking to buy a home abroad. We can help you find a mortgage loan on an L1 visa that meets your needs and budget by connecting you with appropriate mortgage lenders suitable to your needs.
Pre-qualify for a US mortgage as an international buyer.
No US credit history needed.
Is It Worth Buying a House on an L1 Visa?
If you are planning on staying in the United States for an extended period of time, purchasing a property may be a good investment. Not only will you have a place to live, but you will also build equity in the property. Aside from that, the value of your home will only rise over time. Even if you must return to your home country, you’ll retain ownership of the home and may earn rental revenue or put it up for sale.
It is important to weigh the pros and cons of buying a property on an L1 visa before making a decision. If you have made up your mind to buy a house on an L1 visa, then HomeAbroad can help you connect with CIPS-certified real estate agents, lenders, and other resources to help you with hassle-free purchases.
Frequently Asked Questions
What is the Minimum Credit Required to Obtain a Mortgage on an L1 Visa?
Your credit report is one of the most important factors in determining whether or not you will be approved for a mortgage. Generally, you will need a credit score of 620 or higher to qualify for a conventional mortgage. If you have a lower credit score, you may still be able to qualify for an FHA loan.
You should consult with a mortgage broker to determine what the minimum credit score is for the type of loan you are interested in.
What is the Process of Buying a House on an L1 Visa?
The process of buying a house on an L1 visa is similar to the process of buying a house as a US citizen. You will need to find a real estate agent, get pre-approved for a mortgage loan, and search for homes that fit your budget and needs.
One of the biggest differences when buying a house on an L1 visa is that you will need to provide additional documentation to prove that you have the funds to purchase the property. This may include bank statements, tax returns, and other financial documents.
HomeAbroad is the best place to start your search for a home abroad. We offer a wide range of services, from helping you find the perfect property to assisting with financing and closing. Contact us today to get started!
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