When you buy Costa Rica real estate and you need to finance the purchase, you will need to know some important facts about the mortgage cost. Like, who will register the mortgage and who will pay for this?
Of course, you will ask the bank or whoever finances the purchase for information first. In case the lender is a bank, the buyer will always make you pay for the mortgage cost.
What will happen if the lender is a private lender?
You will want to know about the interest rate, your monthly payments, and the terms of financing. But most people tend to forget about the cost to register the mortgage any other mortgage cost involved. Who will have to pay for these costs?
You will have to sign an option to purchase – sale agreement with the seller once the offer is accepted by the seller. In this agreement, you and the seller will agree on quite a few facts. One of those facts should be who will pay for the mortgage cost.
Read our blogs on how to get your mortgage application
Some closing attorneys in Costa Rica will not charge anything for a formal option to purchase – sale agreement if they also do the closing. Check first with the attorney, don’t assume.
So before formalizing this agreement, you will need to know which attorney you will use for the closing and negotiate who will pay for the closing cost.
Usually, the cost of registering a mortgage and anything related to it has to be covered by the buyer.
We suggest you shop around for a mortgage. That way, you can compare the different charges and mostly the mortgage cost. Unless you are not a legal resident. In which case you will be obliged to get owner financing or financing from a private lender. In any case, you might be obliged to cover different charges. Check first on those charges before you sign an agreement with the seller.
Looking for a mortgage? Are you a United States or Canadian citizen or resident, with a good credit score? Then we can assist in your new mortgage or refinancing a hard money loan starting at 8 1/2% interest. Then contact us now, we get the best rates for you.
Mortgage registration cost
Any mortgage, no matter if it is through a registered Costa Rica mortgage or by putting the property in a trust, carries a mortgage cost.
By experience, the cost of registering a mortgage on Costa Rica property varies anywhere between 1.5% and 2%. This way, the property will be in your name (or your corporation’s) with a registered mortgage. In case the lender prefers to use a trust, the cost of putting the property in a trust is usually 2%. This cost will always be paid by the buyer.
Who does the closing with a mortgage?
In case the buyer gets his mortgage with a bank, the bank will insist their notary public do the closing. The bank’s notary public will also do the mortgage documents as one of the requirements for the bank to approve the mortgage.
If it is an owner financing or financing through another party, the lender will insist on using their attorney. It is the lender’s only protection that the Costa Rica mortgage gets correctly registered.
The closing can be done by two notaries, the buyer’s notary does the closing and the seller’s notary does the mortgage registration. If both notaries agree to share the fees, the deed, as well as the mortgage, can be done in one document and the mortgage cost will be lower.
First month
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Before you sign any papers, check if you will have to pay the first-month interest at closing or 1 month later. There are quite a few notaries in Costa Rica who have the habit to charge first-month interest payment at the closing.
Other costs
Other costs will include appraisal, fire and earthquake insurance on the property and most of the time a life insurance. The life insurance will take care of paying off the mortgage in case of death. So the inheritors will not have to worry about this.
Banks will also want you to do a medical test for which you will have to pay.
Many banks and private lenders will also charge a penalty for any early payments or early payments up to a certain percentage of the loan. This is something you might want to check on as well as any other mortgage conditions.
Before real estate closing
Check with different attorneys/notaries for the mortgage cost, we have quite a few that we recommend. Also, have your American European real estate agent guide you through the mortgage issues.
After real estate closing
After you have purchased a property in Costa Rica, ask your attorney to send you proof of title after the closing.
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