New immigrants that might have a great job history back home, may find it harder to purchase a home here, in the United States. At home, their supporting documents may be readily accepted, but once they move here it is like starting all over again. Rather than being forced to rent or live with relatives, there is an easy way for new immigrants to secure a mortgage – the ITIN Mortgage gives these people a great way to achieve the American Dream – to own a home.
The Identification Needed
New immigrants are not going to have a social security number and it is this number that grants most people access to mortgage funds. What new immigrants need, however, is the Individual Taxpayer Identification Number or ITIN. This number is issued to immigrants by the IRS so that they can file their taxes. It turns out that this number also has other purposes, including helping these people purchase a home to live in rather than renting.
One other major hurdle that most immigrants face is the lack of credit they possess. Most immigrants have little to no credit, but that does not mean that they cannot get an ITIN mortgage. Most lenders that offer this program understand that there is going to be very little credit to use for qualification purposes. Instead of requiring traditional credit, they will use alternative credit. This can include any of the following:
- Rent payments
- Secured credit card payments
- Utility payments
- Tuition payments
- Insurance payments
Basically any payment you make consecutively, month after month can be used. Most lenders will require at least a 12-month history of the payment in order to use it as an alternative trade line.
One area that many foreign nationals have difficulty proving is their income. Because they are new immigrants without a legal status in the country, many employers choose to pay cash rather than putting them on the payroll. If this is the case, obtaining a fully documented loan is near impossible because there is no way to trace the income that a person makes. If this is the case, an immigrant might have to rely on bank statement loans, which cause the interest rate to go up even more, but without the proof of income, deriving a debt ratio and even income consistency would not be possible.
Assets are often not impossible for new immigrants to prove, with the exception of those that still have their assets in their own country. These funds might be able to be used for qualification purposes, but they will take longer to get approved as the documents have to be translated as well as validated. It is always easier if your assets are located in an account in the United States.
As probably suspected, the interest rates you will pay on an ITIN Mortgage as opposed to a mortgage where a social security number is used, is much higher. This is because the bank is taking a very large risk by providing the funds to a foreign national. Without a long history of your credit and income, lenders have to base their findings on what you provide, which might not be a whole lot. Because of this, the interest rates can be 3 points or more higher than traditional lending, but if it is your dream to own a home here, the price could be well worth it.
The ITIN Mortgage is becoming more and more common among lenders as it is one of the least defaulted on loans, even when compared to loans provided to citizens of the United States. Because of this, some larger lenders and many smaller lenders are offering this program to immigrants, giving them the chance to own their own home.