//frequently asked questions

Can a foreigner safely buy land in Mexico?

Yes. In the past 30 years Mexican laws have changed and are now more accommodating towards United States Citizens who wish to own property in Mexico. Foreigners used to be prohibited from owning property in costal areas referred to as The Mexican restricted zone (property located within 100 kilometers miles of the border or 50 kilometers of the Mexican coastline). Now US Citizens can purchase property in this zone through a trust. This trust (which is called a fideicomiso in Mexico) enables the selected bank to act on behalf of the purchaser. It is important to note that Collateral International, LLC requires a Guarantee Trust on all loans, regardless of property location.

How does this trust (fideicomiso) work?

The fideicomiso is much like any other American trust. While the bank, acting as the trustee, becomes the official owner of the property, you become the beneficiary. Under this agreement, as the beneficiary you retain and enjoy all rights of the property. This includes, but is not limited to, the right to occupy, rent, repair, or sell the property. The trust is for 50 years and is renewable for additional 50-year periods. In setting up the fideicomsiso with a Mexican Bank, there is a trust set up fee and an annual fee as well. We require a Guarantee Trust on all of our loans regardless of the location of the property.

What are the closing costs?

The closing costs will be a bit more for your Mexican property than what you are accustomed to in the US. On a cash transaction, it will cover the trustee fee, appraisal, homeowners insurance, property acquisition tax (equal to 2 % of the purchase price), and other miscellaneous fees. On average, closing costs run between 7%-10%. Closing Costs without financing may seem much lower. However, please remember that in "Cash Closings" you are not buying Title Insurance, Escrow Services, Title Search, nor a U.S. Market Style Appraisal.

Breakdown of closing costs.

We have outlined the "Cash Purchase" Closing Costs versus Financing Closing Costs Below.

• 2% Transfer Tax (based on sales price).
• Deed Recording Fee (Public Registry)--varies by state, however it is usually between 1-1.25% of the sales price.
• Notario's fee (Notary Public)- this will vary depending on the notary. Usually their fees are 1%-1.5% of sales price. Includes Mexican avaluo, Certificates, Misc.
• Trust set up fee. The set up fee is appx. $600- $800 with a yearly fee of appx. $600- $800. This will depend on the trustee bank. However, an SRE Permit from the Mexican Government is required. This permit costs about $1,700 (depending on exchange rate).

With FINANCING (In addition to the above):

• Title Insurance: This can cost between $4 per $1,000 insured to $6 per $1,000 insured. Ask if your development has a "Master Policy" with a Title Insurance Company.
• Title Search: This fee will depend on the Title Company. However, fees begin at $700.00 for the search. We will need a copy of the current deed of record.
• Escrow: Stewart Title and First American charge $500- $750 for the Escrow Service.
• Collateral International Loan Origination Fee: 2% to 2.5% of the LOAN amount (depending on the market). $575 Doc prep/Processing Fee. $375 Doc Review/Closing Doc.
• The U.S. Market Appraisal fee is $1,000 to $2,500 depending on the area.
• Closing support in Mexico range is $500- $2000 depending on services performed.
• The total closing costs (all fees) average 7%-10% of the sales price.

How much do I need for down payment?

Minimum down payments range between 20-40%. Please see Rates screen. Our minimum loan amount is $175,000. We do not allow subordinate financing with our loan.

Can I finance investment and commercial property through Collateral International?

The properties financed by Collateral International cannot be considered investment properties. The loan must close in the individual borrower's names. We will not allow a loan to close in the name of an LLC. Our loans are to finance a 2nd/vacation home in Mexico. We do not offer financing for a primary residence or for investment property.

Is Title Insurance available in Mexico?

Yes. In fact, Title Insurance is required on all properties we finance and is available through Stewart Title Latin America as well as First American. Collateral International requires a Lender's Policy but we also recommend that you obtain an Owner's Policy. Both of these companies also offer Escrow Services. The title company will usually require a deposit to begin the title search. You will be credited with that amount on the closing Funding Sheet.

Is there a prepayment penalty on the loan?

Yes, for the first three years of the loan, there is a prepayment penalty. Please download the Borrower’s Package to review.