Home buying by new immigrant



 
The American society places a lot of emphasis on home ownership and more than the joy of owning your home is the financial benefit you get from paying lower taxes (the property taxes and interest on the home mortgage you pay is deductible for income tax purposes and can save an average middle class homeowner thousands of dollars a year).  When you rent, you get no tax benefit and all the money you pay just disappears (in the mortgage payment each month, you also make a small payment towards the actual loan amount, so you are also saving indirectly).

How can a newly arrived immigrant buy a home?  If you have the cash to pay for it, all you need to do is to ask a real estate agent help you find one and then with the help of an attorney just do the paperwork.  That is why I recommend that if you have just arrived in the US, buy the home that you can pay for in cash, live in it for a few years while building a credit history and getting to know how things work, and then buy a dream home.


 

Can I borrow money to pay for the house?  Most Americans put down a very small percentage of the home price (the standard is 20% but many of us with decades of excellent credit history can get away with putting down next to nothing, maybe 5%) and then they get the mortgage for the balance amount, and then make a monthly payment.  Unfortunately, for a newly arrived immigrant with no credit history, borrowing is nearly impossible, regardless or how much money you actually have.  That is way responsible use of a credit card to build a credit history is useful in eventually being able to borrow.  The bottom line is that if you cannot pay for the home in full then you should rent for a few years.