One of the most common questions that MoXi (Global Mortgage) receives is "what are the costs associated with financing & refinancing in Mexico?" 


On this page, we will review both the financial and intrinsic benefits of financing your dream home in Mexico (reduced cost of living, lower property taxes etc.) and we'll be 100% transparent about the fees as well.


Benefits of financing / living in Mexico as a U.S. Citizen: 

  • Reduced cost of living (depending on lifestyle changes, of course)
  • Lower property taxes (in many cases, less than $1,000/year)
  • Incredible culture and immersive experiences
  • Living in a tropical paradise that most people dream about

There are fees to process your loan application. These fees typically include:

  • Credit Report Fee
  • Underwriting Fee
  • Commercial Appraisal Fee
  • Document Preparation Fee


Fees related to buying a home in Mexico as a U.S. Citizen:

These fees can be quite substantial and generally increase in line with the value and where the property is situated. We will of course use our expertise to guide you through the relevant costs and try to minimize these as far as possible.

  • Cadastral Appraisal Fee
  • Escrow Fee
  • Wire Transfer Fee
  • Recording Fees
  • Tax Status Research Fee
  • Acquisition Tax
  • Closing Coordination Fee
  • Escrow Fee
  • Notary Public Fee 


Lender's Fees

  • Loan Origination Fee
  • Loan Processing Fee
  • Funding Fee



GLOSSARY of finance & refinance terms:

Acceptance  - a verbal or written confirmation of an offer to buy a property, made from the seller to the buyer.

Acquisition / Transfer Tax  - also known as ISAI. Individuals or companies purchasing real estate, or land and its improvements in Mexico, are subject to an Acquisition Tax. The rate is 2-3% of the value of the property depending on the state. This fee does not apply to refinance.

Annual Percentage Rate  - is the rate of interest on the loan to be paid back to the mortgage lender.

Amortization - is a schedule on how the loan is to be repaid. A typical amortization schedule will include the amount of money borrowed, the interest rate paid and the term of the loan.

AppraisalMexican Valuation  - conducted by a Mexican government authorized appraiser and is similar to assessments made in the US for taxation purposes. Appraisal fees are assessed per parcel and calculated on the real estate value.

AppraisalResidential  - is conducted by a professional appraiser who evaluates the property and gives an estimated value. It is based on inspection of the property and comparable houses that have recently sold in the same vicinity, if possible.

Appreciation - the value that increases on a home or property. Improvements in the market and home renovations are typical reasons for appreciation value.

Assessed Value  - a value determined by local government appraisers. It is used to calculate annual property or real estate taxes. In Mexico, it is called a catastral appraisal.

Assumable Mortgage  - a type of mortgage that may be transferred, with all of the terms, from the seller to buyer.

Bank Trust  - also known as a Fideicomiso, is an instrument in which the deed to a property is held by a trust bank. It is a requirement for all foreigners to purchase property within Mexico's restricted zone. The trust bank holds the deed to the property with the owner having the right to enjoy purchase or sell the property. These trusts are for a period of 50 years and are renewable and transferable.

Bank Trustee  - the individual who is employed by the trust bank and oversees and facilitates the bank trust (Fideicomiso) for the foreign buyer.

Borrower  - the individual is given a loan and mortgage for the purchase of a house and / or property who is responsible for all payments and fees related to the loan for the life of the loan.

Buyer's Agent  - real estate agent that represents the homebuyer.

Capital Gain  - profit earned on an asset, such as a home or property.

Capital Gain Tax  - a tax levied against the profit made on the sale of a home and / or property.

Cash-Out Refinance -  a loan that allows the borrower to extract home equity at the same time as refinancing the property; an alternative to home equity loan.

Certificate of No Liens - a certificate of no encumbrance that contains chain of title, description of the property and shows there are no conflicting claims to the property.

Certificate of No Taxes Due  - certificate of no taxability to prove there are no outstanding property taxes or other assessments on the property at the time of the agreement.

Closing - the formal and documented sale of a home and / or property, including the signing of all documents for the loan with the payment of required closing fees.

Closing  Attorney  -  an attorney that channel so act as the Closing Settlement Agent as well as provide legal advice to the buyer or seller.

Closing Cost  Estimate - an estimate provided by the lender for closing costs from a mortgage and is a way for the lender to inform the buyer of what is needed from the mat the time of closing of the loan.

Closing  Costs  - costs that the buyer pays during the mortgage process. There are many closing costs involved including attorney fees, trust fees, notary fees, governmental permits and other costs associated with the mortgage closing.

Closing  Settlement  Agent  - is used to coordinate and manage the closing process in a purchase or mortgage transaction. Fees are for services associated with the transfer of title, trustee bank approval, and transfer, communication and coordination of all municipal and federal permits and coordination of parties for closing.

Commitment Letter  - a document from the lender to the borrower that explains the terms of the loan.

Comparable Sales, Comps  - similar home sale prices in the area that are used in the calculation of a home's appraised value.

Contingency - a common clause added to real estate agreements that allow buyer or seller rights during various stages of a transaction.

Date of Closing  - the date upon which all documents associated with a mortgage / property sale is finalized.

Date of Possession  - the date the buyer will move into a home or property which is usually the closing date but could be a different agreed upon date as well.

Debt  - the amount of money a borrower owes to creditors. A metric that is used to calculate creditworthiness.

Debt to -Income  Ratio - lenders consider a number of ratios and financial information to determine if the borrowers are able to repay the loan. In debt-to-income-ratio, the lender compares the monthly payments, including the new mortgage, and compares it to the monthly income. The income figure is divided into the expense figure. The result is a percentage. The higher the percentage, the riskier loan it is for the lender.

Default - the inability of the borrower to make regular and consecutive payments on a loan.

Depreciation  - measurable loss in value of a home or property which can be driven by poor economic factors or property damage.

Down  Payment - the amount of the purchase price that the buyer is paying.

Earnest Money - a sum of money a buyer puts up as a token of good faith when an offer on a home or property is made to show that the buyer is seriously pursuing the purchase.

Equity - the difference between the value of the home and the mortgage loan. As the value of the home increases and the amount of the loan decreases, the equity of the home increases.

Escrow - at the closing of the mortgage, borrowers are required to set aside a percentage yearly taxes to be held by the lender and every month, the lender will collect additional money to pay the taxes on the home.
Escrow Account  - separate account held by a mortgage lender out of which required property bills, separate from the loan payment, are made such as property taxes and insurance.

Expedition of Deed  - fee to issue hard copies of a title. This fee covers the delivery of the legal document given to the buyer, seller, creditor and Trustee Bank.

Fair-Market-Value  - the price that a piece of property is worth in the current market.

Trust  - also known as a Trust. Is an instrument in which the deed to a property for a foreigner buying a property in Mexico. It is held by a trust bank. It is a requirement for all foreigners to purchase property within Mexico's restricted zone. The trust bank holds the deed to the property with the owner having the right to enjoy, purchase or sell the property. These trusts are for a period of 50 years and are renewable and transferable. 

Fideicomiso Fee  - an annual fee charged by the trustee bank to maintain the Fideicomiso or bank trust.

Fideicomiso Setup Fee  - the fee that is charged to set up a bank trust.

Fiduciario  - the financial institution that facilitates and holds the trust (Fideicomiso) for foreigners to own property inside the restricted zone in Mexico.

Fixed  Rate  Mortgage  - is a mortgage where the interest rate and the term of the loan are set for the life of the loan.

Foreclosure  - the repossession of a home and / or property by a lender in the event of the borrower defaults on the loan.

Hacienda - the former name for Mexican IRS, currently known as SAT. 

Home Loan  - not a mortgage, but the amount of money a buyer owes the lender in the purchase of a home.

Home Owner's Association  - an association attached to a neighborhood, apartment, condo or townhome complex that establishes certain rules of ownership. Responsibilities of a homeowner's association can include a collection of neighborhood dues for landscape maintenance or membership in recreation and entertainment facilities.

Homeowner's  Insurance - before closing the loan, the homeowner must secure property insurance on the home. The policy must list the lender as loss payee in the event of a fire or other event, with the effective date being before the loan is closed.

Interest Rate  - calculated as a percentage and is used in the financial industry to indicate the rate charged for use of money in a loan.

Lender, Mortgage Lender  - the bank or finance company that directly extends a home loan to a borrower or home buyer.

Lien - a legal symbol of money owed on a major asset such as property. A mortgage is a form of a lien.

Loan - money lent from a financial institution to a borrower over a specified period of time and at a particular interest rate.

Maturity  - the lifespan of a mortgage; the period of time in which the debt must be paid off.  For example, a 15-year loan matures in 15 years.

Loan to -V alue  Ratio - a financial calculation that is done by dividing the amount of the mortgage by the value of the home.

Mortgage  - loan and supporting documentation for the purchase of a home.
Mortgage Loan Application  - the application filled out by the borrower to apply for a mortgage loan.

Notario  Publico  - an attorney who is commissioned by the government as a public notary and fulfills a public function delegated by the government. In a real estate transaction, Notario Publicos review and authenticate all of the documents for the transaction. Although they are a licensed attorney, they can not provide either buyer or seller legal advice.

Notario Fees  - fees paid to a Notario Publico for the review and authentication of all documents involved in a real estate transaction.

Origination  Fee  - when applying for a mortgage loan, borrowers are required to pay an origination fee to the lender. This fee may include an application fee, appraisal fee, fees for all the follow-up work and other costs associated with the loan.

Points - are percentage points of the loan amount.

Power of Attorney - legal document that grants an individual the right to act on behalf of another. For example, if a borrower or seller lives out of the country the borrower or seller can grant someone the right to sign necessary documents on their behalf for the purpose of a real estate transaction.

Pre-Approval  - pre-approval is the step after pre-qualification in which credit and initial information have been provided and assessed. Passing pre-approval allows the borrower to begin the loan process.

Pre -Qualification   - the initial step in the loan application that involves answering and submitting simple questions regarding debt, income and assets. Passing pre-qualification does not guarantee approval for a loan.
Principal - the amount of money that is borrowed for the mortgage. The principal amount that is owed decreases when the borrower makes regular monthly payments.

Property Taxes  - known as Predialin Mexico, these taxes are paid annually with the assessed value determined at the time of sale. These taxes are based on the Mexican valuation appraisal (cadastral) and the rate varies by state, typically1-2%.

Recording Fees - It's a type of government tax called “Derechos” in Spanish (Rights). This amount is charged for the authorization of the appraisals approved by the Municipality through the Cadastre office and is determined by an arithmetical calculation set up by the Municipal Tax Finance Law.

RNIE fee  - also known as National Registry of Foreign Investment. In a real estate transaction, it is required that the purchase is registered with the RNIE. The bank trustee is responsible for ensuring the registration and it is completed after the real estate transaction is closed.

Refinance - the process by which a borrower / homeowner negotiates a lower interest rate on a mortgage, thereby lowering monthly payments. All fees that are required for a new home loan must be paid when refinancing a loan.

Public Registry - in Mexico, the public registry. A Federal Public Registry exists to maintain a public record of merchants, as well as activities and events related to merchants. The Public Registry receives, stores, safeguards, consults, reproduces, verifies, administrates and transmits that data determined by law and regulation, for its registry and public access.

Remaining Balance  - current balance owed on a home loan.

Remaining Term - The current amount of time remaining for the length of the loan.

Repayment Schedule  - mortgage payments laid out over the life of the loan.

Restricted Zone  - the area in Mexico that is 100 km from any border and 50 km from all coastlines. Foreigners purchasing a property in these areas must obtain a Fideicomiso, SRE permit and RNIE permit.

SAT  - Mexican IRS formerly known as Hacienda.

SOFOM  - A Sociedad Financiera de Objeto Múltiple is a form of the enterprise under Mexican law. A Sofom's main objective is to provide loans and credit. Sofoms can either be regulated entities (ER) or non-regulated entities (ENR).

SRE Permit  - Also known as a trust permit. It is filed by the bank trustee and allows foreigners to own property within Mexico's so-called “restricted zone”; land 100 km from any border or 50 km from all coastlines.

Seller's Agent  - a real estate agent that works on behalf of the seller.

Title  - the official document used in the real estate industry that specifies at any one time who owns a piece of property.

Title Company  - handles all tasks associated with the property title, including insurance and search.

Title  Insurance  - Since the lender is using the home as collateral for the mortgage transaction, they need to be certain that the title of the property is clear of any liens. A title search will ensure that the homes are free and clear after which title insurance is placed on the home.

Title  Search  - is for the purpose of revealing existing liens, history of the property, easements and any other details pertinent to the property.

Translator  - in Mexico, an expert that is authorized by the Council of Federal Judiciary and those authorized by the corresponding councils of each of the states of the Federation and the Federal District.  Certified translators are required for the translation of legal documents.

Translation Fee  - fee paid to a certified translator for documents, namely in legal transactions.

Underwriter - the company or service that evaluates a borrower's credit worthiness prior to loan and mortgage approval.


It's time to explore your options and see how MoXi (Global Mortgage) can turn your Mexico dream into reality. Contact us today!  

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