Home Loans In Mexico: For U.S. Citizens!

Video Transcript - (Speaker: Alex Koper, CEO)

Alex:

Hi, I am Alex Koper, CEO of MoXi, and today we're talking about unlocking the dream of home ownership in Mexico for U.S citizens and how MoXi is helping to make that happen. I've had the pleasure of being the CEO of MoXi for almost four years now, and the company has been around for about seven, although a majority of our work has happened in the last three or four years, which is really exciting. MoXi's originated nearly a hundred million dollars as of the day of this video in U.S dollars in mortgages to U.S citizens, purchasing, refinancing, or cash-out refinancing property in Mexico. And it's our mission to democratize access or make global home ownership really possible for the world and for its people. In our initial foray into that, or our initial market launch is U.S citizens purchasing, refinancing or cash-out refinancing property in Mexico.

Today we're going to be talking a little bit about how we, MoXi, can help and our team can help you or help other U.S citizens or U.S residents to facilitate home ownership in Mexico and to do it legally and to be protected when you are making an investment in property in a foreign country.

So we'll start by kind of talking a little bit about some of the challenges that foreigners in particular face when they are purchasing property in Mexico or getting liquidity out of the property they already own in Mexico. And we'll also touch on how MoXi sort of helps as the secure and transparent lending partner to US citizens or US residents that are purchasing or refinancing property in Mexico. We'll talk a little bit about how our team works and helps support and uphold you, our client and or our business partners in the local markets across the country of Mexico. In order to make that happen, we'll talk about some success stories, MoXi's team and experience, and then how you can get started or learn a little bit more about this and or get in touch with our team.

So kicking off, let's talk a little bit about some of the challenges. How are U.S citizens or U.S residents, foreigners in general, how are they going about buying property in Mexico and what are some of the challenges that they run into and what is the availability of financing for a U.S citizen or a U.S resident borrower that is looking to purchase property in Mexico? And what's really interesting, we're going to start there, is that, when I am out speaking with real estate agents or professionals, developers that are in our business in the local market, I often ask the question, "Hey, when you're speaking with prospective buyers, what are some of the questions that they're asking you?" And almost every time I hear that the very first question that the real estate broker or developer or developer sales agent is asked is, "Well, how does the mortgage financing work?"

And typically, and historically before MoXi, the answer to that question is, "Well, this is kind of a cash market, you'll have to figure out how to get the cash in the United States and just bring it over the border, close in cash, it's kind of a cash deal." MoXi is changing that conversation every single day, but what's really interesting is that that's the first challenge you may face is that you'll find a real estate agent, either your agent or on the seller side or the developer who may not know about MoXi's options or the availability of financing. So that's their very first thing is, you'll want to do your homework, in the United States you're buying property, your real estate agent knows probably multiple mortgage people they would refer you to for help with financing. That's not necessarily the case in Mexico.

The second challenge that foreigners typically face when they're looking for property or about to transact on property in Mexico is really how it works. We're going to talk about new construction separately here in a moment, but how does it work when you actually close, right? And what is a legal close versus a soft close, and how do you properly diligence the property that you're purchasing? And I think that's a really, really critical factor for prospective clients to be aware of, and it's something that clients choose MoXi specifically for in addition to getting financing, also the work that MoXi's team does, expert team does, to diligence the property and make sure that you're going to actually own it when you pay for it, and that it is free from any liens or encumbrances or anyone else's ability to stake a claim to that property now or anytime in the future.

Those are really important factors. Things also like an appraisal, for example, are critical and people ask me all the time, "Well, you don't necessarily need to get an appraisal in Mexico?" And I say, "Well, would you buy a property in the United States without an appraisal?" Right, the availability of the data on a property proptech website like Zillow or Realtor.com just simply isn't there, there is no Z estimate for the condo unit you're looking to purchase in Los Cabos or the villa you want to buy in Punta Mita or the two unit property in San Miguel de Allende. You can't just go online and look up that value very easily, so it's really important to properly diligence your property, and that's something that MoXi takes a lot of pride in and why clients choose to work with us.

The other is soft closes. So let's get into this, this is a very common pitfall and something that you'll really want to watch out for. In the country of Mexico, a legal closing is a legal closing, there is no deviation to it and you or a designated representative, a power of attorney that you give must go to the Notario's office and sign with blue ballpoint pen on the actual Deed Folio. There's a folio printed that the Notario prints, it has a number, each page is numbered, and that's what actually gets recorded and that's what essentially means you own the property, right? And occasionally or more often than occasionally, that is not what happens, right?

So if anyone's asking you to close without that step, that means that they're probably asking you to do a soft close. And I think that's something to really watch out for, because at the end of the day, if you don't do a legal closing in the country of Mexico, the country does not recognize you as the owner. And then effectively you are paying for something that you don't own. And there is not necessarily always fraud being perpetrated intentionally, but it is more common in Mexico to do a soft close than not, and I would not recommend it, so make sure you're careful.

The other common pitfall to think about, and this is something that MoXi works closely with clients to understand, purchasing property in Mexico is not a low cash outlay sort of activity. It's very different in Mexico than it is in the United States, so where you might expect to have closing costs on a property in the United States, maybe if 1% of the purchase price or even less in many cases, financing aside, right, in Mexico, that figure is going to be a lot more. The biggest amount that's connected to that is ISABI tax. ISABI is an acronym for a Spanish term, but it essentially is transfer tax, and that's due to the government, no matter where you're purchasing property and regardless of whether or not you're a foreigner, and that sort of minimum amount would be about 2.5% plus tax, so closer to 3%. In some municipalities, that number is closer to 4 or even 5% of the purchase price.

And then Notario calculates that toward the end, but it's typically and customarily paid by the buyer. And that in addition to your Notario fees, your Fideicomiso setup, and a number of other sort of upfront charges, fees and costs can mean your cash to close, besides your down payment, will be also between five and 10% of the purchase price. So you'll want to make sure you have that cash ready to go. MoXi has a lot of great tools on our website and our mortgage advisors frequently discuss this topic with clients. We have a fee cost and charge disclosure where we've outlined pretty much every possible fee, cost and charge that could be associated with your transaction and you'll want to make sure you check that out.

So talking a little bit about how MoXi helps our clients to avoid some of these common pitfalls and provide solutions to some of these challenges, MoXi is focused on primarily two things, one, is obviously providing financing where it hasn't been provided before. MoXi's products and programs look very similar to that which you're probably accustomed to in the United States, they are US dollar originated mortgage loans, they have fixed interest rates that do not adjust, they're fully amortized, so you choose a term length of 15, 20, 25 or 30 years and you make equal principal and interest payments on that loan each month. They will not adjust, they will not change, there is no foreign exchange risk, because you're earning your income in US dollars and repaying the loan in US dollars, so you don't have any concerns as it relates to that.

MoXi also reports mortgage interest to the IRS via the 1098 INT each year, which could give you some optionality as it relates to deducting mortgage interest. You'll definitely want to make sure you check with your CPA or tax advisor to confirm that. That said, the core tenants of MoXi's loan products are very similar to that which you're accustomed to the United States, as is the underwriting process. The documents that we're going to collect from you to verify you have the ability to repay, to verify that you have a FICO score, at least 700 or higher, to verify that you have sufficient assets to close the transaction and enough reserves for the loan.

The second core tenet of MoXi's business is really to help make a foreign process feel a little bit less foreign, through thoughtful guidance, through systems and software that interact with you and give you access to information in relatively real time so you're up to speed on your transaction and the various different stages that it's in milestones really that it's in throughout the transaction. The other kind of key thing to emphasize here is MoXi's team has collectively over 200 years of experience, both in Mexico real estate property transfer as well as in US mortgage origination. And so we've brought the best parts of all of our team's experience together in order to design a process to build technology and to work with vendors and partners in various different markets across Mexico to ensure that we can deliver a positive outcome for our clients and our business partners every single day. So a lot of clients trust us for that reason.

In addition to the availability of the financing and the capital where it's not available, we also bring a level of expertise and property diligence to the transaction to help our clients make sure that they are ending up with a really strong investment overall. MoXi has a commitment to pricing transparency, so we will offer clients in their conditional loan approval letter a margin based on FICO, LTV and loan size. That margin is added to a three-year treasury index that's available, you can calculate in real time on our pricing website and about 48 to 96 hours prior to your closing appointment, the rate will be finalized and that rate is fixed for the term of the loan, again, 15, 20, 25 or up to 30 years. So again, we are really focused on transparency, we will always disclose and in fact over-disclose, as a financial institution, everything that you might expect to pay and all and any sort of issues we run into, you'll be made aware of those right away. And that's a really important piece of MoXi's business and what our team members work really hard to provide to our customers every single day.

MoXi clients are typically begin the process with a global mortgage advisor on our team, to collect the documents, take the full application, make sure that we have property documents in some cases so that we can expedite moving the loan through the process to get ready for closing. At the point of initial credit decision, after those documents have been sent and the application has been sent to our underwriting team and has been conditionally approved, a global mortgage client concierge will be assigned to our clients. And the client concierge is the liaison between the mortgage advisor, the attorneys on MoXi's closing team, the Notario, the real estate agents and so forth. And your Global Mortgage client concierge is, again, a very well-seasoned professional who is able to provide you thoughtful guidance and ensure that your transaction moves through the process effortlessly. And if there are issues, because it does happen, that we make you aware of those so that you can make an informed decision just as soon as we know what's going on.

So pausing here, to just transition, we've talked a little bit about some of the common pitfalls and challenges when foreigners are purchasing property in Mexico as U.S citizens or U.S residents. We've talked a little bit about MoXi's solutions as it relates to lending, as well as thoughtful guidance and being able to help our clients navigate a foreign process, but not in a foreign language, if you will. And let's talk a little bit about how you could get started, how you can reach out to us and learn a little bit more. So I would definitely recommend you check out our website www.moxi, M-O-X-I, .global. And on our website is a lot of information, you can link from there to our mortgage estimator where you can not only look at what a mortgage payment might look like for you on the property you're thinking about, but you'll also get a sense for what is the cash to close.

Remember, we talked a little bit about the high upfront sort of amount of cash required to buy property in Mexico legally with transfer taxes and Notario fees and so forth. So what does that actually look like if you're getting financing from MoXi with your down payment plus your costs? What does the amount of cash to close look like on an example basis? You'll find lots of frequently asked questions on our website and the ability to look at various different documents, including our e-brochure that sort of summarizes some key terms that you'll learn about throughout the process. So reaching out to us on our website is a great way you can send in your contact information to schedule a call with a mortgage advisor there, you can reach out to us by phone or by email, but again, www.moxi.global is a great place for you to start. There you can provide us your contact information, we'll reach out to you right away.

So to recap, we've talked a little bit about unlocking the dream of home ownership in Mexico and how MoXi is helping our clients and business partners to make that happen. We talked about some of the common pitfalls and challenges that foreigners, U.S citizens, U.S residents face when purchasing property in Mexico or when they're refinancing property in Mexico or seeking to get liquidity out of their asset that they've owned, maybe for a long time, in Mexico via a cash-out refinance. We talked a little bit about MoXi's products and programs, U.S dollar, fully amortized, term lengths from 15 to 30 years, interest reported in the United States to the IRS for potential tax deductibility, no foreign exchange risk and so forth. We talked a little bit about MoXi's team and our breadth and depth of experience both in Mexico and in the United States and in mortgage origination and credit risk. Talked about some common examples where clients leverage MoXi beyond just purchase transactions in the refinancing cash-out refinance space, as well as MoXi's team and how we sort of operate and engage with our clients upfront.

There's one more area that I think is really important to mention. MoXi does help our clients expeditiously and efficiently navigate the property purchase process and or refinance process, but it doesn't end there. Our clients are clients for life and so for example, if you choose a 30-year mortgage term and pay as agreed and don't pay off that loan early, we are your partner in that, right. Our mortgage sub-servicer in the United States is going to collect your payment each month and so forth, but MoXi is going to be your partner throughout. We are going to ensure that your property taxes are paid on time, recognizing any discounts where we can for you. We're going to make sure that your Fideicomiso is renewed annually, ensuring no issues there.

And we're going to collect a portion of this with your mortgage payment each month, but we're going to remit those payments on your behalf even if they are in Mexican Pesos. So we're making it really easy for you, and our team is always there for you, should you need anything, we're your partner in global home ownership more than just your lender. And so I'll just leave you with that. And thank you so much for watching this video and for your attention. And thank you in advance for the trust and confidence you'll place in us when you reach out to us and work with us on your upcoming transaction. That's it for now, bye.