If you now have no credit history after living abroad for some time, you need to work to build your credit history back in the US.
Q: I am an American citizen who has lived the last 25 years in Switzerland. I paid cash for a house recently because I have no credit history in the United States. We have no debt and I make a good living. I have two years worth of income in savings, but even with that, I get turned down for credit cards.
I own a business in the US with a partner. That business purchased a property on an installment basis and we’re paying it off at an interest rate of seven percent. I’d like to pay it off now by using the proceeds from the refinancing of our home.
We have been in the USA for almost one year and I assume our credit scores will improve enough sometime next year. Every time I talk to a mortgage banker I just get frustrated.
A: While you have attempted to borrow money for your home, you’re probably talking to the wrong people. You need to find a mortgage broker or mortgage lender that has experience working with foreigners buying property in the US. You’re not a foreigner but you don’t have the credit history in the US.
Frequently, lenders in the US will take information from banks abroad to build a history about you. However, recent real estate market conditions may have limited the number of residential lenders willing to participate in those types of loans. Your loan would not be a cookie cutter type deal. As such, you need to find a lender in your area willing to make a deal.
Talk to a mortgage lender and a mortgage broker in your area. But before you give them a long explanation ask them if they have a loan officer that has extensive knowledge in the underwriting requirements for lending to foreigners with a visa coming to the United States.
At least that will tell you that you have a loan officer that has dealt with persons from abroad.
In the meantime, you need to build your credit history. If you don’t have any credit cards, you might find that the offers will start to come in as you live in your home a longer period of time. You will also have a longer period of employment in the US along with a history of payments in the US.
Recently companies have been set up to allow people with little credit history build their own credit histories using non-traditional monthly payments and other sources to gather information about their payment abilities. (Ilyce is on an advisory board for one company that provides this sort of assistance, called eCredable.)
These companies can assist in building an alternative credit score (also called an alt credit score) which you can use as you make your monthly payments. You sign up with one of these companies, input the recurring payments you make to utility companies and others and these companies reverify the information to create a credit history report you can use and give to lenders.
In your case, you might try a company like this to create your credit history or wait for your traditional credit history to build. Lenders usually like to see a two year employment history in the same job. If your relocation to the US was with your same employer, you should be fine, but if you came back to the US and obtained a new job, you might need those two years before you can obtain financing on your home.
With the amount of savings you have, you might also consolidate those savings with one financial institution and find out if that institution also generally provides mortgage loans to homeowners. If they do, you can apply with them and see if the balance in your accounts improves your ability to obtain financing. You will also improve your financing ability if you limit the amount you borrow against the home to fifty percent of what the home is worth.
Given this information, you might have to wait awhile until you can refinance and use that money to fund your other business ventures and opportunities.