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Getting a Mortgage in the U.S.: What to Expect

As the only national mortgage provider dedicated to helping Canadians purchase property in the U.S., RBC Bank is available to not only meet your mortgage needs, but also guide you through the process. As your trusted advisor, we’ll let you know what to expect at every step along the way – all with the peace of mind of RBC.

Step 1: Complete a Mortgage Application

When you apply for a mortgage in the United States, you'll be asked to complete a standard application that is used across financial institutions in the U.S. The Uniform Residential Loan Application or, 1003 form, is a four-page document that captures information about the client including income, assets, liabilities, all real estate owned either in the US or in other countries, the type of property being purchased. In order to ensure a smooth and timely real estate transaction is it very important that complete information is provided which includes a two year history of residency and employment.

Step 2: Choose the Right Mortgage for You

RBC Bank offers three types of Adjustable Rate Mortgages (ARM) which lock in your rate for the first 3-, 5- or 7-years respectively and are amortized over 30 years.* And, unlike Canadian mortgages, our mortgages have no prepayment penalty.

Step 3: Decide How Much You Want to Borrow

Before actually applying for a loan, you can determine your estimated monthly mortgage payment. Speak to a qualified cross-border mortgage specialist for assistance calculating estimated payments.

Included in the monthly mortgage payment are principal and interest, monthly homeowners insurance, property taxes and flood insurance (if applicable which is dependent on the subject property location). It is important to note that property taxes vary by the state or county in which the subject property is located.

Step 4: Calculate Your Down Payment

Typically, a down payment of at least 20% of the value of the home is required in the U.S. The down payment requirement is dependent on the purpose of the property purchase. Purchasing a home to be utilized as a primary residence, second home or investment property each requires varying down payments.

Step 5: Choose a Closing Date

Once you complete the mortgage application and submit all of the required documentation, processing your loan will take about 45 days to close. At the time you apply for your mortgage, be sure to talk to your cross-border mortgage specialist about the date you would like to close to ensure your preference can be met.

Step 6: Understand the Fees Associated with your Mortgage

Costs and terms vary among lenders – and are another difference between the U.S. and Canada. On average, you can expect to pay about 3-5% in fees when financing property in the U.S. Standard application and transaction settlement fees apply and are provided in detail in the initial disclosure package you will receive once an application is completed. These fees may include:

  • Commitment Fee - covers the lender's cost to process your application.
  • Appraisal Fee - the cost for a professional appraiser to estimate the value of the property you plan to purchase.
  • Credit Report Fee - covers the cost of verifying information that you provided on your application and against the credit agency's files and the public record.
  • Flood Certification Fee - certification for property located near or on a potential flood plain; identifies if the property is flood prone and in need of flood insurance.

Step 7: Review the Documentation You Receive About Your Mortgage

Because the U.S. mortgage industry is highly regulated, U.S. banks are required to provide you several documents throughout the loan process. Although some of this information may be new for you, our team of dedicated cross-border mortgage specialists will answer any questions you have about the documents or any part of the mortgage process. Once your mortgage application is submitted, you will receive the following documentation within three (3) business days:

  • Truth-in-Lending (TIL) Statement - This statement outlines the estimated costs of your loan, including the annual percentage rate (APR) and other terms, including points, any other finance charges, the amount financed, the payment amount and the total payments required. You will receive the final version of your Truth-in-Lending statement at or prior to your closing because it's possible that the APR and costs calculated at the time of your loan application may change at the actual closing.
  • Good-Faith Estimate - This is an itemized estimate of the costs to close (or settle) the loan.
  • Guide to Settlement Costs - We will provide you a copy of a U.S. government publication, “Shopping For Your Home Loan: HUD's Settlement Cost Booklet.” This publication describes the settlement process, the nature of charges and your rights, and it also includes an item-by-item explanation of settlement services and costs.
  • Adjustable Rate Mortgage (ARM) loan Terms & Conditions - We’ll provide you a written summary of the important terms and costs of the loan, the past performance of the index to which the interest rate will be tied, and a copy of the booklet “Consumer Handbook on Adjustable-Rate Mortgages,” published by the U.S. Federal Reserve Board.

†All loans are subject to approval, including verification of acceptable income, creditworthiness, and property valuations. Minimum and maximum property values and maximum loan-to-value ratios apply. Homeowner’s insurance is required for all loans and flood insurance is required if property is located in a Special Flood Hazard Area. Escrows may be required. There are closing costs associated with these products.

* Interest rates and payments may increase after consummation. After the initial fixed-rate period, your interest rate can increase or decrease annually according to the market index.

Example: 3-Year ARM calculation assumes a $250,000 loan amount, 2.375% interest rate, 2.463% APR, with 25% down payment, amortized over 360 months = $971.64 monthly payment. If the down payment is less than 20%, mortgage insurance may be needed on the loan. This could increase the monthly payment and the interest rate. Rates subject to increase after consummation.

Example: 5-Year ARM calculation assumes a $250,000 loan amount, 2.750% interest rate, 2.840% APR, with 25% down payment, amortized over 360 months = $1,020.61 monthly payment. If the down payment is less than 20%, mortgage insurance may be needed on the loan. This could increase the monthly payment and the interest rate. Rates subject to increase after consummation.

Example: 7-Year ARM calculation assumes a $250,000 loan amount, 3.375% interest rate, 3.468% APR, with 25% down payment, amortized over 360 months = $1,105.25 monthly payment. If the down payment is less than 20%, mortgage insurance may be needed on the loan. This could increase the monthly payment and the interest rate. Rates subject to increase after consummation.