Truth About Financing Real Estate in Mexico (For U.S. Buyers)

Video Transcript - (with Alex Koper & Troy Houck)

Alex:

I'm Alex Koper. I'm the CEO of MoXi. I get to join these webinars regularly as a participant, and so when the team asked me to help lead one, I was really excited to do that. So thanks for having me on this morning, and I'm really excited to be here alongside with Troy, who's a member of our mortgage advisor team, one of our senior mortgage advisors that's been with MoXi for a long time. Feels like forever, Troy. So it's really a pleasure to be here this morning. Thanks so much for attending. Troy, do you want to just give brief opening remarks, introduce yourself?

Troy:

My name's Troy. I'm mortgage advisor with MoXi and I've been with MoXi since June of 2023, so two and a half years. Prior to that, 25 years of lending in the banking industry and broker industry in the US. I'm [inaudible 00:01:26].

Alex:

All right, Troy. And I have an opening question for you. What is your favorite thing about working at MoXi?

Troy:

Favorite thing about working at MoXi? It's providing a benefit, a mortgage to a US citizen to purchase in an area in Mexico that they never thought that they would be able to. So they didn't have the cash and they look around and we connect, you can just feel it. So that's exciting, and that's all over. It's not just next to the ocean. It's all over. So that's exciting to me.

Alex:

I think there's a couple of things I would just say having been in this business for, I guess now at this point six years, a couple of suggestions I would make as a foreigner buying residential property in Mexico. I think there's a couple of tips I would give. The first being make sure you have proper representation. So whether you're working with MoXi as a lender or not, make sure that you have a really good team on your side, a real estate professional and/or an attorney that's helping guide you through the process because it is a foreign country. You are a foreigner in the country of Mexico, and if you're purchasing property, you want to make sure that you're properly represented.

We probably don't have enough time today to talk about all of the ways in which we see people that don't get proper representation end up not in a good situation, and I'll give one example. We frequently see clients come to us for refinance transactions or cash out refinance transactions, and when we go to pull the deeds, it's sort of news to the client that they don't, in the eyes of Mexican law and the public registry, they don't actually don't own the property. They paid for it, they did a soft closing and they never actually transferred title. So according to Mexico, they don't own the house. That's kind of a common one we see regularly, and that is if you do a soft closing and you go and eyes wide open, you know that's happening, great, but many people don't. And that's just one example of where having good representation, having a great firm on your side representing you and your interests in the transaction of buying for in real estate is really important.

Alex:

Next pre-submitted question is, how can US equity or credit lines be used? And I presume this means to buy property abroad. Troy, you want to take-

Troy:

We see that a lot. We see that buyers in the states, they've got cash, but they've also got equity for down payment and closing costs on the property they're purchasing in Mexico. So what they'll do, they'll do an equity line of credit, which we all know in the states, and they'll use that for down payment and closing costs. Something to note when we do that, we're going to want to confirm if they're taking out a new one or if they're going to extend a current equity line to make sure we're going to grab that liability, that new liability and put it in their liability so they can qualify for it. So yes, we see that a lot for down payment and closing costs.

Alex:

I'll add, there's lots of different ways to accomplish this goal. So MoXi offers financing, US dollar financing at a fixed rate secured by the collateral, secured by the property that you're buying or refinancing or cash out refinancing. You can also pay cash. So many people will leverage an asset that they have in the United States, bring the cash across the border and pay cash for the property in Mexico. So that is another common way of accomplishing this. You do want to make sure that you're careful and make sure that leveraging those assets in your home country makes sense for you and your overall financial situation. That said, the other sort of caution we would give with the home equity line of credit or any sort of variable rate line of credit that you're going to tap in order to buy or use it for down payment and closing costs alongside your MoXi loan would be that you understand the terms of that credit facility.

For example, many home equity lines of credit are tied to the prime rate, we saw firsthand the prime rate basically within 12, 16 months more than doubled back between the, I guess, second quarter of 2022 and 2024. So many people, for example, if you took a half a million dollar draw on home equity line of credit or an asset-based borrowing facility that had a variable rate, you saw your payment more than double in a very short period of time. And so MoXi's fixed rate equal payment long-term mortgage loan solutions are a nice offset or hedge against that. I guess the net message here is if you do borrow on an adjustable rate credit line in the US, MoXi doesn't offer adjustable rate credit lines, but if you do that on your own, please just make sure that you consider all the scenarios associated with that, including the Federal Open Market Committee's adjustment of rates in response to inflation.

Alex:

Can we use the equity in the pre-construction apartment as the 35% down payment for a MoXi 30-year fixed rate loan? Good question. Troy, your thoughts?

Troy:

We're going to lend to contract price, so it's going to be 35% down. If you put that 35% down during the course of construction, we're going to use that towards your down payment. But yes, to note here, and it is a great question, I get this a lot too, is we're going to lend to original contract price on a 30-year fix, 25-year fix.

Alex:

Yeah the credit guideline is the same as it is in the US. We're going to use the lower of the purchase price or the appraised value on a purchase transaction. Now, on a refinance or cash out refinance transaction, if the ownership chain is seasoned, I believe it's 12 months, we'll use the new value to calculate your LTV. So if you bought and closed at least a year ago, we would use the new appraised value to calculate your LTV on a cash out refinance transaction. And again, this is very similar to the way that it's done in the US. But on a new construction, you might've gotten into contract three years ago, the property's worth a heck of a lot more now when it's being delivered than it was when you got into contract, that's the beauty of new construction in some Mexican markets, but we're going to use the lower of the purchase price or appraised value on a purchase transaction. So great question.

So I guess the answer technically is no, you cannot use the equity in the pre-construction as part of your 35% down payment. However, you can use whatever cash proceeds you've paid to the developer as your deposit. That does count absolutely. So to give a quick example, let's use round number. I realize this is not a typical use case, but for easy math because we're on Zoom here and I don't have a calculator in front of me, but a million dollar pre-construction purchase price, and you've advanced, let's say, $600,000 in deposits to the developer, and now you're ready to do the closing because the unit is built and you're going to transfer title, you would actually get a refunded closing. So if you took a 65% purchase loan from MoXi, that's a $650,000 loan, that 650,000, our money goes into escrow, your 600 you've already paid. You have 1.25 million in consideration for a property that only costs a million. So you get some cash back. It's actually technically an escrow overage, which is kind of cool.

So appreciate that question. Hopefully we didn't thoroughly confuse you with that response, but short answer, we're going to use the purchase price to calculate LTV, but any deposits you make to the developer as part of your sales contract, those are absolutely used in the calculation of cash to close. And if you've overfunded, you get it back. Cool. If there are further questions on that one, because I know it can be complex, feel free to drop them in the chat. We'll get back to it. Okay, the next question's a good one. Is MoXi the actual lender or do they sell the deal at the table, or do we... I think what this means is are we a broker to another financial institution, another bank, or are we actual lender? Good question. I love the answer to this one too. Troy, go for it.

Troy:

MoXi's like a mortgage banker. We do the underwriting, we originate, we process, and then we'll fund. Our investor's on the US side, and it's also serviced on the US side. So as far as selling, I'll let Alex get into the details there. But yeah, we're like a mortgage banker, very similar, if not identical to the US when it comes to originating processing and underwriting.

Alex:

we design MoXi that way on purpose, so we have full control over that. So we are lending our money, we are not lending someone else's money. We are not arranging financing for you through another lender, which means we are not subject to that lender's whim. We get to control the credit decisions that we make, we get to take care of our clients, and that's ultimately. So we are actually funding MoXi mortgages. Now, like any mortgage banker, every so often that pool of mortgages will get traded in a way, not securitized, but traded so that there's more room to make new mortgages. MoXi continues to sub-service the in-country part of all of those loans for the life of that loan, so up to 30 years. So we're not just helping you originate and saying goodbye, never see you again. Our servicing team actually is there for you over the long haul until you pay off the loan. So we're sort of your partner forever, whether you like it or not. No, just kidding. I think a lot of people do like it. Great question.

Troy:

Are you doing loans in Costa Rica? Great question, and I think Alex got a text from me when I was in Costa Rica at the end of August saying, "Hey, what do you think?" So our long-term fixed loans that we've got, the 35% down, the 30-year fixed, 25-year fix, no, it's specifically for Mexico. However, there is a product that we've got, and we'll get into that as we go through these questions, called the Anywhere Loan, and it's possible to use the Anywhere Financing to close a loan, a personal loan in a foreign country.

Alex:

I'll use this moment to just talk about what our goals are at MoXi. We started MoXi to make global homeownership possible for the whole world, not just for Mexico, not just for US taxpayers, and that's our mission. That's what drives all of us every single day. We got started in Mexico for a couple of key reasons, one of which being it's the number one expat destination for US citizens and US taxpayers, and it's a wonderful country besides that, but our overarching long-term mission is to be truly global. It's part of our name in many respects. So definitely stay tuned. And we continue to focus on building products and programs that help the tens of millions of people around the world that are trying to do just that, and we realize that's not just in Mexico. So Anywhere By MoXi is our first foray, if you will, into the global space, and I think just last week we closed our first non-Mexico transaction there, so more to come.

Alex:

I think this ties to another question about... Someone's asking, do you offer shorter terms than 30 years? I don't know where that is on this... Oh, number 25. So yeah, the loan terms, MoXi loan terms, this is a good one. For our standard core, or what we call our core program, the loan terms go from 15 years to 30 years, kind of borrower's choice, in five-year increments. So the client can choose 15, 20, 25, or 30 years. There is a price add when you get to 30. Probably, I don't know the exact number, but a significant majority of MoXi clients choose the 25-year term, 300 months, because there's no price difference between 15, 20, or 25, and there's no prepayment penalty on our loans.

So what that means is you can take a 25-year loan, gives you the payment optionality, gives you lower payment. You can certainly make principal curtailments subject to the terms of the loan agreement anytime you like, and then you could pay it off at any time without penalty after closing. So most people take the 25-year, helps them qualify because it has a lower payment, gives them optionality in the event that they don't want to be paying on a 15-year term, but you can certainly take a 15-year term. Anyway. I'll leave it at that. So some flexibility and optionality there, and it's a good question.

Troy:

Something to add to that real quick, and it's not part of the question, but we don't have age restrictions either. So no matter what term it is, 15 to 30, there is no age restrictions. I say that because local banks and a few brokers in Mexico have age restrictions.

Alex:

That's a good one. I forget about that. Along those lines, we also don't require life insurance. So many of us have been in the US mortgage and credit business for decades, and some of those things feel really foreign to us when we hear that a lender will only make you a certain term of loan based on your age or that you're required to take out a life insurance policy. I think in the US, it actually is illegal, but in Mexico, it's very common. We do not have any of those kinds of features.

Troy:

Financing or refinancing is done with Mexican banks or US banks?

Alex:

Good one. The answer is neither at MoXi at least. So we are not a broker, as we covered a few minutes ago. Our loans are funded by us. They are serviced in the United States, but they're originated in Mexico by our Mexican entity. They're not from a bank. The only involvement of a Mexican bank in a real estate closing with MoXi is on the fideicomiso de garantía, which is the trust, and the fideicomiso de garantía is managed by a Mexican bank. We arranged the setup as part of the closing process, but that's the only area in which a Mexican bank is involved. The money, the loan itself does not involve a US or a Mexican bank. Good question.

Troy:

I am a dual citizen, US-Mexico, do I qualify for this program as a borrower and as a business partner? I can add to that, if you want. We're going to lend to the actual individual, to the person, the US citizen. You can close up if you wish in a US LLC. That's got to be qualified, that the LLC's got to be qualified by our legal team. Yeah, go ahead and add to that, Alex.

Alex:

you get this one a lot, and congrats for those that are dual citizens, it's something that I've been trying to do for a long time. Mexico does not make it easy. So with respect to MoXi, so if you are a dual citizen or maybe you are married to a dual citizen or your partner is a dual citizen, we get these kinds of questions a lot, that's awesome. At MoXi, we specifically lend to foreigners, so to US taxpayers. So even if you hold Mexican citizenship as well, and that does afford you, for example, the ability to buy in a restricted zone without a fideicomiso. If you want MoXi financing, you need to have a fideicomiso de garantía specifically that we arrange for you, and so we're going to underwrite and process and close your transaction with you as a foreigner.

Sometimes you need to create a foreign entity to do that. Still going to use the fideicomiso de garantía, but you can hold, as Troy mentioned, title in a US LLC, a US trust, sometimes even a corporation domiciled in the United States. The loan is made to... I would say the key thing to keep in mind if you're vesting in an entity is that the member managers, for example, of the LLC need to be borrowers on the loan and vice versa. So you cannot have three member managers on the LLC, for example, and only two borrowers or three borrowers and only two member managers on the LLC documents when we look at it. Now, I will say all of that entity diligence is done prior to close. Whatever you choose to do after closing with the entity, for example, add or remove a member manager or something like that, of course, that's not something MoXi is party to subsequent transactions with the entity itself. So some clients, I believe, take advantage of that. That said, you definitely want to make sure that you check with us.

I think that's kind of the key piece. We close in LLCs probably every day would be my guess. I see it happen a lot. And so MoXi has specific vendors that do expedited notarization and apostille of the documents and ship the originals down to our office in Mexico over processing. So we make it really easy, or I should say we've operationalized a relatively complex process and we've added some technology around it to make it fast and easy for our clients. So closing in or taking title, I should say, inside of the feta committee, in an LLC, in a corporation, in a trust, or in your individual name as a foreigner is something we can help with generally. And there are a few guidelines associated with some of the entity holdings.

Troy:

we're working with American buyers interested in financing properties through MoXi, and we'd like to clarify a few things. So that's Daniel, we'll reach out to you and discuss that with you one-on-one, do a discovery call with you.

Alex:

reach out if you have specific questions about that. It looks like they want to clarify a few requirements from the seller side. So the seller wants to probably get some more information about how MoXi loans work with respect to the contract. So absolutely fine. We're happy to do that. Our mortgage advisors, like Troy, for example, and his teammates speak with listing agents and buyer's agents every day, and we're happy to do that.

Troy:

Is MoXi providing construction loans, and if we have land on which we'd like to build a residential home? Great question. We get this one daily. We don't provide construction loans, however, we have an outlet for that for construction loans. Yeah, we get that question a lot. If you're building on your own with your own funds with the takeout at the 65% at the end, so we were going to need the property manifested and completed 100%, and then we could, like I said, do the takeout at the end on that. But we won't do specifically a construction loan.

Alex:

I would just add here, if you are purchasing new construction property from a developer in a development, we do that a lot. So there's a process typically, depending on when you get into contract, if you're getting into contract before ground is broken and then you have a two-year lead time, we're going to have a different sort of suggestion for you than if you're buying a unit that's already complete and you can move into it pretty soon. That never used to be the case, by the way, but it is now. There's lots of inventory coming online that people are snapping up. So it really has to do with, as Troy mentioned, whether or not the property's ready to transfer legally. MoXi follows the law in Mexico without exception, so our requirements are no more stringent than what the Mexican law says. That said, in order to transfer title from seller to buyer, from developer to buyer, whatever, you have to have manifestation of construction.

If a property has subject to HOA restrictions, you need to have a condo regime and that condo regime needs to be recorded with the public registry. And those are the two longest tent poles, if you will, in what we commonly see as delays in new construction. So long as those things are done, we absolutely will finance new construction. If you already own a lot... We maintain at MoXi sort of a wishlist of products and programs and lot loans is one of those, both in purchase and refinance. Our Anywhere By MoXi program does allow for cash to fund construction shortfalls on a lot you already own.

Otherwise, what many clients do is if they've already bought the lot, if they're mid-construction, as soon as they're done building, they'll come to us and we'll do a refinance or cash out refinance when there is a residence sitting on it for us to appraise. We send an appraiser out. If it's just raw land, it's not eligible for financing. There's an actual house that has a kitchen and plumbing and windows and walls, and there's something for us to appraise and it's habitable and has been manifested, then we will make the loan and you can recoup your construction cash proceeds.

Troy:

Assuming that the Fed will change interest rates soon. Soon. More please, right? Here in the US, how long does it take for MoXi to implement a change in interest rates for borrowers? Great question. We get that question a lot. MoXi determines the interest rate by an internal margin based upon credit score, loan to value and loan amount, plus the three-year treasury, which you can Google and watch the three-year treasury on a daily basis. So when that three-year treasury comes down, down, down, down, down, depending on what's going on in the US market, changes our rates. So fairly quickly, very quickly. So go ahead and add to that, Alex.

Alex:

I would just say there's a common misconception in the US. The Fed or the Federal Open Market Committee, they adjust short-term borrowing rates, which is the overnight rate that banks can borrow from the Fed. That does not directly impact mortgage rates. So when the Fed cuts rates or raises rates, what it does impact... Earlier in this call, we talked about home equity lines of credit and asset-based facilities, it impacts the prime rate upon which those credit facilities are based. It does not necessarily impact mortgage rates in the US or at MoXi. Mortgage rates tend to be priced based on Treasury Index. So where you might see in the US, it might follow more closely the 10-year Treasury yield and MoXi's going to follow the three-year treasury yield. And we have on our website, I'm sure Chris or Jason, whomever is monitoring the chat can put it there, but we have a pricing page on our website that sort of explains how that works.

And typically when clients enter or start working with MoXi, they submit their documents. In their conditional approval letter based on LTV, FICO and loan size, you'll receive in your conditional loan approval letter a margin, and then you can track your loan pricing in real-time throughout the transaction by following the three-year treasury and adding your margin to it. And about two or three days before your actual closing date, that rate gets finalized and fixed for the whole up to 30 years. So it's a good one, and a common question, common misconception. The Fed does not directly impact mortgage rates. They are down considerably, and we adjust those rates in real-time.

Troy:

What are the options for refinancing of a property in Mexico? Is there a similar product to a HELOC for Americans on their homes in Mexico? What does this look like? Yes, we have refinance products up to 60% loan to value. It's popular. It's very similar to the US, which is nice. As far as HELOC is concerned, MoXi doesn't offer a home equity line of credit. We have the Anywhere Loan that we touched on about 15 minutes ago, so we could definitely discuss the Anywhere Loan on that property in Mexico.

Alex:

I would just add here, to my knowledge, I don't think Mexico sort of offers a... When you look at securing a lien by a property, in the US with a HELOC, you can record a lien for that maximum credit limit, and that doesn't really exist in Mexico when you're talking about lien security. So that's why we don't have home equity lines of credit in Mexico. We do have cash out refinance, as Troy mentioned, and that's pretty common. So that just means you get all the cash right up front and you sort of manage that on your own. But yeah, home equity lines of credit, to my knowledge, the way that they function in the US, it doesn't exist, and that is because of you can't really record a lien on a variable rate... A variable... It's actually related to the principal balance.

And maybe it's easier if I give an example. When we close a transaction, there is an amortization table appended to your deed that gets recorded. So it says the original unpaid principal balance and each monthly payment, all 300 of them or 180 of them or 360 of them. So that amortization table is actually appended to the recorded documents that go to the public registry, Registro Público, and if you have a credit line that allows draws here and there, you can't append a amortization schedule because you don't know what the principal balance is. So that's the best way I could describe that. Cash out refinance is a great option though. Troy, just to mix it up a little bit, I have a question for you which I think might be fun, and I know we have a lot more questions in the chat as well that were submitted ahead of time, but I think inquiring minds want to know what's your favorite client that you've helped at MoXi, your favorite family or situation in the last three years or so that comes to mind?

Troy:

there was a deal we were working on, gosh, it was about six months ago. It was a referral from a realtor. The buyers were wonderful. They're wonderful. And they had already put money down. They were in it rolling and there was a title issue. Before that, they were actually denied by two lenders. Then there came a title issue. They had already put money down, so the realtor came to us and we were able to put it together. There was a lot to it, but the buyers were extremely grateful, and that's what we're here for. Even though things are tough, we're not going to just say, "Hey, sorry, we can't help you." We're going to take that extra step to try and make it work.

Everybody on my team's got a lot of time in this industry, 20-plus years. So it's not just about the gravy, the easy-peasy deals. It's taking something that's we thought was broken or the buyer thought was broken and taking it to the finish line. One of the best I've done. I've done thousands and thousands and thousands of deals in my career. One of the best deals I've ever been a part of. Super grateful and blessed. Yeah.

Alex:

That's my why. That's why I show up to work every day is those people that have had this dream forever that either delay it or don't think it's possible, and then we can help them make it possible, and that's pretty fun. There's also plenty of people that could do it without us, but would prefer to do it with us, and we're happy to do that. That's also awesome. It's an important part of our business, but I love that. Thank you for sharing.

Troy:

We come across a lot of buyers, they travel and they're looking around. They always think they've got to have cash, cash, cash, and unfortunately, a lot of agents push that, but they can finance with us. So there's several of them that came to me and we qualified and we took them all the way to the finish line. They never thought they were going to be able to purchase, and we got them there because we have the financing available for them.

Alex:

I think, Troy, also, I see this just from you and the other mortgage advisors on the team, I think people are looking for US dollar fixed rate capital, plain vanilla mortgage programs like we offer, which in an area where the only other options are very exotic, which I think is scary for a lot of people. But the other thing I think people are looking for besides the money itself, the capital, the reasonably priced and responsibly originated mortgage loan itself is this, A, ability to transact in a foreign country and speak to somebody who literally speaks your language, and B, somebody else like the MoXi team looking out for you when you're transacting in a foreign country, because some people perceive that to be scary. So I think you guys do an amazing job with that every single day. It's pretty awesome. So thank you.

Troy:

And we hear that a lot too when we're talking to buyers with the steps that we go through with title searches and appraisals and asking for documentation from that seller where if you pay cash a lot of times, some of those steps may be skipped, may not be, but when they come to us, we're going to have checks and balances and we're going to go through all those checks and balances accordingly to make sure the property is vetted, and yeah, take it to the finish line.

Alex:

Let's take some questions from the chat. It looks like Chris is in here. Thank you, Chris, so much for helping answer so that we make sure we got back to everyone. This most recent question is from Roberto, "Can you do a cash-out loan on a property I own in the US and use that as a down payment for the loan?" I assume you mean the MoXi loan. My quick answer is yes, you can use proceeds from a cash-out refinance for your down payment on a Mexico purchase. Can MoXi do it? No. We are a Mexican company, so we lend only on properties in Mexico through our standard program and then anywhere on countries outside of the US specifically.

Alex:

We'll go to the next one. But yeah, yes, you can use cash-out refinance proceeds on a property you own in the US as down payment for your Mexico property purchase transaction alongside a MoXi loan. The answer is yes, but MoXi does not originate loans on properties in the US. Okay. This is a good one. Is the fideicomiso mandatory? This is from Olive maybe or Olivia. Is the fideicomiso mandatory even if the property is not within 50 kilometers of the coast restriction by Mexican law? Good question. Troy, you want to take it?

Troy:

We're going to require fideicomiso on everything safety. We do require it if it's in San Miguel or in Puerto Vallarta or Cabo or Rocky Point, so we will require that.

Alex:

And the why behind that is because that's how we record a lien. So we use fideicomiso de garantía specifically for all MoXi loans, again, regardless of the location. So even in a zona non-retraída, I think I might've butchered that, we require a fideicomiso de garantía. And even if you are a dual citizen, we still require it because that's how we make the loan and secure the lien. Good question. Okay, this is a good one. I'm surprised it hasn't come up yet. What are about the interest rates? Mexican bank's interest rates for mortgages are really high starting at 11% and up. Does MoXi offer better rates than that? My answer, yes, absolutely. Troy?

Troy:

I can answer that. Until we look at the whole package, until I look at your credit and we check the loan amount and loan to value, I've got to give you a range, but I can tell you, just like Alex said, we're considerably less. Our interest rates are considerably lower than what you're going to find by a local bank in Mexico. Definitely.

Alex:

This was an earlier question. I'm not sure if we ever got to it, and apologies. Softball, this is from Ari. Hi, Ari. Can you explain the advantages of using MoXi over using a Mexican foreigner-friendly bank like HSBC Scotia? I unfortunately don't know enough about their programs. Especially with declining interest rates. I'm married to a Mexican national, so we have advantages regarding having Infonavit if we went that way, but I also realize that interest rates are still higher than the US. They are, for sure. Can you also touch on why it is better to use MoXi despite having chunky closing costs? Yes. I will take the closing cost question and the interest rate question, but I don't know enough... Troy, I don't know if you do. I don't know enough about the Mexican foreigner-friendly bank options from HSBC.

Alex:

As you know, Ari, or as we touched on a couple minutes ago, MoXi loans are priced based on a three-year US Treasury yield, and so those are declining and have declined pretty significantly. Our rates in the very best case scenario, probably in... Again, I don't want anyone to take... They can change at a moment's notice because it's based on an index that we don't control, but probably high sevens in the very best case scenario, meaning super high loan amount, low LTV and super high FICO score today, and they go probably all the way into the high nines today. That can change. It also is highly dependent on the transaction itself. How much are you borrowing? What is the credit score of the primary wage earner and how much down payment are you putting? And so that's where our range is, but it is significantly lower from what we understand the rates available in Mexico.

And then for those that are earning their income in US dollars, holding their assets in US dollars, all of our loans are originated or denominated in US dollars, so you have no foreign currency exchange risk from that standpoint. If you take out a Mexican peso loan, you've got to buy Mexican pesos every month when you're making your payment, and some months could be good, some months not so good. We just saw the Mexican peso dip below 18. I think it was maybe even this morning, Friday, I can't remember. So I think that the currency portion of that is good.

I will address... I'm surprised it hasn't come up yet, but I want to address closing costs. So we do charge an origination fee for our loans. We also are big believers in transparency. So we have a fee letter. We also issue an estimated cash to close worksheet several times throughout the loan origination process, and as we get invoices in from third-party vendors, we will publish those on this estimated cash to close worksheet. So we're always going to give you the worst case scenario of all of these costs and fees so that you're prepared for that, and oftentimes I think you'll find it comes out usually a little bit better. It is so highly dependent.

The actual costs from third-parties, for example, notarios, title search, title insurance, you have to have your documents translated by a certified translator, for example. There's all sorts of third-party costs associated with closing real estate transaction in Mexico. Probably the largest cost is actually not the MoXi loan, it's the transfer tax due to the Mexican government, ISABI, and in some markets, that's 4% now of the purchase or sale price, some markets, it's three. So it is very cash-intensive. It's very expensive, if you will, upfront, particularly as a foreigner, to buy property in Mexico. I don't know about the other fees or the fees from HSBC Scotia, for example. Yeah, I can't speak to that, but I don't know. Troy, anything else you'd add here?

Troy:

Yeah, very similar to the US, and we get this question a lot too, MoXi's fees are very similar, if not set on every transaction, and they're considerably less than the overall total. So just like in the US, you've got the fees in the US for mortgage brokers are a quarter to a third of the total. We're very similar, if not identical to that. So when you see that total, it's not MoXi charging the buyer all those fees. Super important. It's kind of like borrower paid in the US, if you will, pricing.

Alex:

The other thing I'll add, on all MoXi loans, we require impounds, which means we're going to collect 1/12th of your estimated property tax, of your hazard insurance, of your fideicomiso annual renewal each month, and so when you close, depending on when during the year you close, we're going to collect a lot of initial deposits into that impound account at closing. So having an impound account on a loan in the US is typically optional. At MoXi, it's not. It's required for all loans. So many clients tell us it's an advantage because they don't have to worry about paying their property taxes on time. Some municipalities won't even take a credit card with a US billing address, it has to be a Mexican billing address. So we handle all of that for our clients, which makes it easy.

We got a question from Lottie, a realtor. Hi, Lottie. You're asking about the loan programs. Yes, our core standard program is a minimum loan size of 250,000 US, up to two and a half million US. We do go higher on exception occasionally for well-qualified clients. Currently, for our MoXi Anywhere program, 75 to 200. That's an entirely digital product, and Chris, I think added the website here, so if anyone wants to take a look at that. Cool. Lorena, purchasing a condo from new development under construction as a dual citizen. Oh, that's a good one. Got lots of questions layered into that one. Troy, you want to start it there?

Troy:

so we will be more than happy to qualify you for that new construction. The biggest piece is condo regimes. We need that condo regime completed by the developer, that way that the property's deedable. We're still going to lend you up to 65% of original contract price, qualify just like we would on any other transaction, but we really drill down on that condo regime because we can't do a whole lot. Things stop if it's not completed. But again, we can talk with you and make sure you qualify for that end loan.

Alex:

I think we're happy to help. We definitely probably have five more questions for you to fully answer, but I think it's something we deal with on a regular basis. You're buying new construction condo. There's so many other things. I'll say this: You'll want to take a look at final overall purchase price. So MoXi typically is able to help clients who are purchasing property with a value in excess of the equivalent of 350,000 US dollars and higher, we just typically aren't able to help as well on lower price properties. The requirements we have from third-parties around title search, title insurance, notary fees, translation costs, all of these kinds of things are prohibitively expensive on small loan sizes, and that's why we have a minimum loan size of 250,000 generally, and minimum sort of property value of 350,000 for our core product. It's in part also why we tested the Anywhere program for quicker execution. Cool. Let's see. Other questions?

Alex:

David says, "Hello, I've been working with Troy already. You are pre-approved for a loan later next year. Where do you anticipate interest rates to be by June or July?" Let me get out my crystal ball, David.

Troy:

We don't know exactly. We'd love to say they're going to be at six or five or nine, or whatever, but we don't know exactly. So it's best just to check with us periodically and we'll have that. We can run the numbers for you as of that day and then go from there. And watch the market, watching the market, see what's going on on the north side of the border.

Alex:

And David, since you're already approved, if you have your conditional loan approval letter, in the letter, you should see your margin, probably I think it's somewhere on the first page, and then you can check, you could bookmark, you could refresh every 10 seconds if you want our pricing webpage, which I think Chris put the link in the chat earlier and you can kind of track your rate in real-time. It's using the margin in your approval letter that's based on your specific situation, add it to the three-year treasury index, which changes every couple seconds, and then you can see where the rate's going to shake out.

Yeah, I'll refrain from giving my personal opinion. I think if you read other economists' rate predictions in the mortgage space for 2026, we're not going to... Barring some sort of major economic emergency, like a global pandemic or a world war, we're not going to see a precipitous drop in rates anytime in this coming year, in 2026. Those sort of maybe level out, maybe come down a little bit, but that's sort of from my understanding, rating multiple rate predictions that will generally be flat, possibly down a little bit, but we'll end 2026 not too much far lower than where we are today. Good question from Roberto. Are there any areas in Mexico that MoXi will not finance a property? Troy?

Troy:

Well, we do. We lend all over the country. Title is a big piece. I'll let you go into the title piece there, the LTO and all that, if you don't mind. But just general, yeah, I mean, from Rocky Point, Mexico to Cabo to San Miguel de Allende, all the way over to the Playa del Carmen. But yeah, title's a big piece. Yeah, go ahead and touch on that.

Alex:

So no, there are no restrictions geographically for MoXi in Mexico. I would say you got to have clear titles of the property, which I think which Troy just mentioned, and then you really have to have a US dollar equivalent value greater than really 350,000, really well north of 350,000. I think those are the two key pieces. So there are some markets in Mexico whose maximum sale price is well below that. And so it's not that we don't lend there, it's just that it wouldn't qualify under the credit policy guidelines. And then there are some areas that are known for having a lot of ejido title issues, and we'll always enter into the transaction and do the title search, order the title search with you to see, but there are areas that are known for having more title issues than others. And so at the end of the day, you got to clear those two sort of hurdles for financing.

It's 9:59, but Pedro asks a really good question. I love these questions. They're really good. So do you know if interest paid onto my loan are tax-deductible on my US taxes?

Troy:

It's best to obviously connect with your CPA to determine if you're going to be able to deduct that interest. However, yes, since the loan is serviced in the US, you will receive a 1098 at the end of the year, and then you're going to provide that to your CPA accordingly.

Alex:

We get this one a lot. We're not tax lawyers, we can't provide tax advice. We are told by some clients that they were able to deduct the mortgage interest. It really depends. We do have an article coming out. I saw a draft of it, and I think it's coming out as a blog post on our website in the next couple of days actually. We're trying to get it out and published before year-end, that specifically talks about how taxation works for US taxpayers who are buying or already owned property in Mexico. So that's coming shortly. Watch your inboxes, watch our website. That should be coming out a little bit later. But we don't give tax advice. You should definitely talk to your tax professional, but there are some advantages. It's just highly dependent on your particular situation. And I know a little bit about a lot of things, but enough to be dangerous.

All right. Really, really appreciate everyone's wonderful questions and engagement today. Just from the bottom of my heart, I want to wish you all a very happy holiday season. We're excited about everything that's to come for all of us here at MoXi and all of you and our broader audience globally in 2026. Please make sure that you reach out to us if you have any questions.