If you thought the language on a loan contract was hard to read back home, imagine examining one in Spanish. It’s a pain to deal with all the paperwork and financial details that go into securing a home loan, and being in another country doesn’t make it any easier. So the first and most important step you should take in securing a loan is to find someone in the industry who knows what he or she is doing.
Any of the well-recognized banks in Costa Rica would be a loan hunter’s best bet, but their services vary widely. Most banks require residency in the country to take out a loan, but a number of them don’t. The banks that don’t require residency include Banco Nacional, Scotiabank, Banca Promérica, Banco Cuscatlán, BAC San José and Banco Improsa (see chart at left).
Violeta Fernández, a corporate relations representative for Banco Nacional, said the best way to apply for a loan is to approach any of its agencies or branches. She said the bank can manage credit directly there.
Fernández said foreigners can easily make mistakes when trying to take out a loan. For example, she said U.S. citizens sometimes forget to provide tax forms certified by the U.S. Internal Revenue Service. People of other nationalities must certify their income with an authorized public accountant of their country, and the Costa Rican consul in that country must certify that the accountant exists. This latter certification must be authenticated by the Foreign Ministry in Costa Rica to verify that the signature of the consul is authentic.
Fernández said foreigners should try to be patient when applying for a loan from a state bank. Like most everything in Costa Rica, it can take time and require presentation of a number of personal documents and more paperwork, thanks to bureaucracy.
“They must understand that the requirements are part of other requirements set forth by local banking legislation,” Fernández said.
Another common mistake for foreigners is comparing the level of active rates for loans in Costa Rica to those of their native country, she added.
Most banks here offer loans in colones or dollars. Financing can vary greatly among banks, though many offer 70-80% of the appraisal. Banco de Costa Rica (287-9154, www.bancobcr.com) will finance as much as 95% of the appraisal.
With terms ranging from 15 to 30 years, interest rates for loans in U.S. dollars vary from about 7-10%. Rates for loans in colones have dropped considerably since the implementation of the floating currency exchange rate, and presently range from about 9-12%. Additional costs include commissions, legal fees and appraisal fees.
When considering what property taxes will be like on your new home, Fernández said it’s best to consult the local government from where you’ll be buying, since taxes vary from one municipality to the next in Costa Rica.