“It is not a great time for Canadians to pay cash for a U.S. home.”
Thus argued Alain Forget, the RBC Bank’s director of sales and business development, noting that the continued weakness of the Canadian dollar is making the prospect of buying property in the U.S. housing market—which has seen continuous recovery since the financial crisis—a dismal one.
Forget said that Canada’s current fiscal climate discourages all-cash purchases, and suggested that would-be buyers take out mortgages instead.
“In the past, many Canadians have used cash to buy their U.S. home. However that means using the equity in your Canadian home, cashing out investments or using your savings. With any of these options you’ll have to exchange your Canadian dollars for U.S. dollars, significantly reducing the cash you have to buy your U.S. home,” Forget told The Globe and Mail
Forget added, however, that those going for the mortgage option should take into account the documentation and procedural differences between obtaining mortgage in Canada and in the U.S. For one, processing of a mortgage application in the United States might take as much as 45 to 60 days, whereas it would only require a few days in Canada.
Most importantly, Canadians who want to take the plunge and get a home in the U.S. should seriously consider the larger fees and the much longer amortization period.
“U.S. mortgage products provide much longer rate terms including up to 30 years at very low rates. In Canada, you can obtain a 25-year term rate but rates are much higher, persuading people to nearly always choose one- to five-year term rates,” Canada to Arizona director of business development Miles Zimbaluk said.