It seems so long ago that we were trying to get a mortgage for this house that it is hard to believe it has almost been a year since we were approved. It really was a very difficult task getting our mortgage from a Puerto Rico bank. You see, because the house was under construction, no bank would give us a traditional mortgage. They all wanted to give us a Construction Loan (if at all) which would have racked up a 17% interest rate along with hazard insurance, progress reports to the bank and check lists which we would be required to complete on the monthly basis. It was serious stuff, and as this is our first construction venture, we weren’t ready for that type of commitment.
After much research, dozens of phone calls and emails, we got in touch with a Puerto Rico mortgage company which would grant us our loan (traditional, 30 year fixed rate at 6%) but they had a few stipulations to ensure we finished our house and didn’t take the money to the Bacardi factory in San Juan and drown out the noise of our newly purchased generator with rum. They required us to give them about 20% of the homes value in an interest baring CD account with them that they would hold for two years (we make the interest, but our money is tied up) and another 12% as collateral that we would finish the construction to their specifications. It was a bit of a shady situation, but after 6 months of trying for a mortgage (with impeccable credit and a large amount of money saved) we decided if we wanted to buy the Sector Vargas property we were going to have to trust the Puerto Rico mortgage company that would sell our mortgage to Banco Popular as soon as we closed the deal and they made their commisions.
Well, after giving the bank most of our cash/savings, we had to spend our present income on completing the house. This gave us a monthly budget (which we somehow managed to exceed on the regular basis) to complete our bathrooms, kitchen, flooring, electrical, plumbing, excavation etc. Well, come January, we had to hold off on dumping money into the house so we could pay taxes (we are both business owners so the tax man is always a bit of a mystery to us until our fiscal year is done).
Because we exceeded our monthly budget, I spent a good portion of my tax savings on the house, and realized that in order for me to make my taxes on time without penalty, the bank was going to have to issue us our Certificate of Occupancy which would lead to a refund of our initial deposit (about 12%). Summer knew we were going to make it just fine, but we hadn’t finished all of the required items on Banco Populars Popular Mortgage to-do list so I started going into the bank about a month ago telling them that the economy isn’t what it was and that I shouldn’t be required to complete all of the things they want me to do to the house. I talked them into sending an inspector out to the house, and with some well placed barking dogs, the inspector saw everything he needed to see to approve our Certificate of Occupancy!
Banco Popular / Popular Mortgage issued me a refund check on Friday, ten days after approving our Certificate of Occupancy.
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just found your blog. very informative since my wife and i are wanting to move to the rincon area. we’re not surfers but just want to live in paradise. do you know of a restaurant that has closed called la cima sunset. i’m talking to the owner about renting it from her and opening a restaurant and bar. it looks to be off the beaten path, so if you know any thing, good or bad, please let me know. good luck with your house, looks like your hard work is paying off.
Getting a Mortgage in Puerto Rico is hard! Nothing like the No-Docs subprime loans you could get here in in California. But on the other hand Puerto Rico Property taxes are extremely low and you can be exempt from them in your primary residence.
Ivan, you are absolutely right. Moving to Puerto Rico gives business’s many tax breaks, let alone the ones we get just as primary residents.
The tropical weather, waves and lifestyle ain’t so bad either.
First, thank you for creating this website! I am in the midst of building a vacation house in the Puntas section of Rincon and have tried to learn as much as possible from you guys. I, too, avoided getting a “construction loan” due to the high costs and restrictions. However, once the house is complete, I need to obtain a mortgage to pay back everyone I’ve borrowed from to date. I only know about Western Bank, Banco Popular, and the Cooperativa. Any information you can provide would be greatly appreciated (list of mortage companies, notes, etc). I would LOVE to lock in a 30 year fixed rate of 6% on this house once it is complete (about two months from now). Thank you for all the advice you’ve inadvertently provided to me as well. I look forward to hearing from you!
Some other lenders in Puerto Rico:
Santander, BBVA, Doral, and RG.
my wife and i love your website!! Your most reacent post about mortgages is simply horrifying. we are about go to closing and commit to construction. Western bank has given us a 7% for the year of construction. if you dont mind (or have free wknds - if so 516 3303556) i would love to pick your brain via email or cell. PS did you make it out in that surf it seemed INSANE!! thanks for schooling us!!
Stefan,
I am glad to hear things worked out for you. I wonder if you could help me, as it is obvious after reading your post that you’re almost a resident expert on getting a “non-traditional” loan from a Puerto Rican financial institution. This is my situation:
I want to buy a piece of undeveloped real estate in the southern town of Salinas. Owner is asking for $90,000. I plan to build a house, but it won’t be for another 2-3 years. I don’t have the cash in my pocket to purchase the property, but I am doing OK with salary (I am working in Africa) and a pension (US Army, Retired), I can pay the $90k in 18 months and my credit history is excellent. My main concern is that I can’t call Puerto Rico from here (Equatorial Guinea), but plan to go to Puerto Rico for a couple of days during my vacation time (late June 2008). Won’t have much time do go around walking trying to find a lender. Question: Would you happen to know which financial institution would provide me with such a loan? If you do, how would you go about the process. Again, congrats of making your dreams come true. David Robles
David
I don’t know of a financial institution that will provide an inexpensive loan on a land purchase. The smartest thing I’ve seen anyone do around Rincon to avoid that is to build a small one bedroom cottage on the property so it (the little house and all the land around it) can be sold with a regular old traditional mortgage.
I would recommend calling Banco Popular, Western Band and The Coop ahead of time and check their rates and begin organizing your paperwork. There was so much more than I anticipated.
I think the Coop provides loans based on how much assets you have in your account with their bank and are the most reasonable with projects.
Good luck!