Expat and Mortgage Guide to Phuket
As an expatriate to Phuket the most confusing thing that you can face is buying a home in Phuket. It maybe both interesting as well as frustrating. Buying a home over here in Phuket can put a lot of stress on a person even if the person is well experienced in the job.

It gets very difficult particularly when it comes to taking a mortgage loan. There are long processes that ought to be followed in order to qualify for a mortgage loan and you should remember that real-estate properties in Phuket are affected by the Global Mortgage crisis.

If the entire process is not known about then the entire ordeal might get very frustrating because of all kinds of documents that need to be read and all the business language that is being used. Everything becomes quite nerve-wrecking.

The loan application process therefore needs to be explained to expatriates that are living and are employed in Phuket.

This article is meant to do that in order to aide you through the entire process and to explain to you the difficulties and complexities of obtaining a mortgage loan for a Phuket property.

The Loan Application Interview in Phuket
Contacting a loan officer or other lender representative is a very vital step to follow once you are decided upon the bank for yourself in Phuket. What the representative does is collect all kinds of information that is required by the lender in order to approve your loan application. So the officer does much of the work for you and you won’t need to worry about gathering all these information all by yourself aimlessly. The officer on the other hand will also help you understand the various kinds of loans that are available to you in this place as well as all the requirements of these particular loan schemes and the interest rates and fees rate of each of these. He will guide you all the way as you fill up the application form and answer all your queries regarding the form as well.

Thus with all this information you will soon get a good knowledge of all sorts of fees and interest rates charged in Phuket. But you should know that the total cost of the mortgage loan consists of the interest rate, origination fees, discount points and miscellaneous other charges. One point is equal to one percent of the amount of the loan and this amount is usually collected at the loan closing, or final settlement. Therefore, points affect the amount of cash you must have at the closing. The interest rate, on the other hand, affects the monthly payment that you need to make to the bank in Phuket.

Most lenders in Phuket will offer a range of interest rate as well as point combinations to meet the borrower needs in Phuket. Generally speaking, the higher the interest rate is the lower the points get. The loan officer is going to explain to which combinations are suited to you and show you all of your options from which you can decide with ease. If the current market provides for an 8.5% interest rate with 2 points, a nine percent rate might be offered at no points. As a first time home buyer here in Phuket, you will find the nine percent loan much easier to handle whereas if you are a corporate transferee you company’s relocation policy will pay all or part of the costs and therefore you might find the lower rate much more appealing.

There is one thing about which you ought to know and that is the “lock period’. You should find out from the lender how and when the rate and fees on the loan are going to be finalized. Many lenders in Phuket quote a rate and fee at the time of the application and then will guarantee that rate for a certain length of time. This is called a rate lock. While the loan is processed in Phuket you are protected from a rising interest if this guarantee is given to you. But at the same time even if the rates decline the rate or fee will still not change. Such a lock period may last from ten days to two months but the time period can be extended with an additional fee. Make sure that the lock period is long enough to get you through the closing date like a thirty day lock period is not enough when the closing stands two months ahead.

The alternative to lock period is letting the rate “float”. This is a little risky but if you are confident about your ideas of rates declining then you can choose this option for sure. In this one you set the final rate and fees nearer to the settlement date. But before taking any kind of risk you need to make sure that your income is enough to cover up the payment in case the rates rise and not fall. Knowing all about these two options is therefore a necessity.

Completing the Loan Application Form
The information that is required in order to fill up the loan application form is about the property that you are buying in Phuket, the terms of the purchase contract and the employment and financial history of all loan applicants, including your spouse and or other co-borrowers. The lender will of course verify all information before thinking of giving the loan and therefore all information needs to be complete as well as correct.

Just a little bit of preparation enables you to complete the fill up of the application form with ease and accuracy. The loan officer will of course help you out with it all but it is a very good idea to collect all the necessary information before even meeting with the officer to make the process easier and shorter. You would be asked to fill up in details about your personal finances in Phuket, including bank account numbers and balances, current loan amounts and payments, and credit card account numbers. Thorough as well as precise answers will benefit you more than anyone else.

Here is a summary of all the major kinds of information required on the loan application including the list of documents that might be needed and the possible questions that you should be prepared to answer to the lender in Phuket.

Details of Purchase Contract and the Phuket Property
The lender in Phuket will have an evaluation made of the Phuket property as that is the security for the loan. So there are certain pieces of information that he will ask for. Like:

- A complete copy of the Purchase and Sales Agreement of the Phuket property, including any addendum’s, signed by all parties, showing the full names of the sellers and buyers in Phuket as they will appear on the new deed, the amount of earnest money deposit and who is responsible for the closing costs, origination fees, etc in Phuket

- A set of plans and condition is required in case the house in Phuket is to be built, or is still under construction.

- The complete mailing address of the property in Phuket, its age and its full legal description.

- Name, address and telephone number in Phuket of the real estate agent and or the seller of the property in Phuket who will assist the evaluator in obtaining access to the Phuket property.

The purchase contract of the Phuket property comes with all this information so if you do not find it there you should immediately contact the realtor or the seller.

The social contribution numbers of you and your spouse or other co-borrowers, the age of each member, number of years of schooling, your marital status, number and ages of dependents and your current address and telephone number in Phuket – all of these will be asked for by the loan officer. You should be prepared to supply former addresses for up to the last seven years in case you have not lived at your current address in Phuket for 2 years or more. You will need to specify your current housing expenses in Phuket; including rent or other mortgage payments, real estate taxes and insurance (your mortgage payment may include tax and insurance funds). The name and address of your landlord(s) or mortgage lender(s) in Phuket for the past two years is also asked for.

Employment History in Phuket
What the lender will look for, first and foremost is your capacity to pay the mortgage loan on a regular basis and your ability to afford the costs associated with owning a home in Phuket. So providing this information should be your principal concern. Required information includes:

- At least two years employment history with employer’s name and address in Phuket, your job title or position, length of time on the job, salary, bonuses, commissions and average overtime pay.

- Recent paycheck stubs and Federal W-2 forms for two years (some lenders in Phuket may require full Federal tax returns).

- Records of dividends and interest received from investments.

- If you are self-employed in Phuket, full tax returns and financial statements for 2 years, plus a profit and loss statement for the current year to date.

- A written explanation if there are gaps in your employment record, because of circumstances such as illness or layoffs, or for any other reason.

The loan officer of the bank will then ask you to sign a Verification of Employment (VOE) form. Your employer will be sent this form so that he can verify your employment status and earnings in Phuket. If you had any previous employers one of these forms will be sent to him as well if your new job has been for lesser than two years. Many lenders in Phuket now use a general authorization form which allows them to verify employment status and other financial information that they need on the application.

In case you are depending on income from other sources like a rental property in Phuket, social security or disability payments, child support, etc., you must provide adequate proof of the source. Appropriate documents could include canceled checks, copies of leases, certification of benefits, divorce decrees and similar evidence.

A detailed listing of your personal assets is required on the loan application form. You will need to have the following information available to complete the form:

- All bank accounts in Phuket, both checking and savings, and money market accounts, with the name and address of the institution, name(s) on the accounts, account numbers and current account balances.

- Recent bank statements from banks in Phuket for at least two months.
- Current market value of stocks, bonds, CDs and other investments.
- Vested interest in all retirement funds.
- Face amount and cash value of life insurance policies in force.
- Make, model, year and value of automobiles owned in Phuket.
- Address and market value of all real estate in Phuket owned along with the amount of rents collected, the mortgage on the Phuket property and the monthly mortgage payments (a profit and loss statement will be required for investment properties in Phuket).
- Value of other personal property such as furniture.

As said before, you would be asked by the loan officer to sign the Verification of Employment form, Verifications of Deposit Form (VOD) for each of the institutions or maybe you will have to sign a general authorization form where you have savings or checking accounts. You need to make sure that you have your current balances and that those are the accurate ones as differences between the account balances reported by the institution and the balance you give for the loan application should be prepared to be accepted.

All the sources of your funds, the ones with which you will make the down payment and pay closing costs and fees will be closely looked at by the lender. Gifts from a relative, church, municipality or non-profit organization in Phuket might be used at times but these are to be verified in writing. The donor must be a relative in case you are providing less than 5 percent of the sales price. You must then provide a letter stating the donor’s relationship to you, the amount of the gift and the fact that no repayment is expected.

Personal Indebtedness
Make sure you document all of your current bills, loans and other debts, including current balances and monthly payments. Now debts include automobile loans, credit cards such as Visa, MasterCard and other retail store accounts, finance company, bank and credit union loans and existing mortgages in Phuket, including home equity loans. You should be able to give the account or loan number, the monthly payment, the number of payments remaining and the outstanding balance.

The information provided by you on the loan application is later going to be confirmed by a credit report that the lender is sure to order. Differences between your figures and those on the credit report will of course raise questions and might delay the approval of your loan to a great extent and therefore you should gather all the correct information of your debts before beginning to fill out the application form.

In case you have had any credit problems you are to make the lender know all about it. If you have any unemployment problems, illness, marital problems or other financial difficulties then it will temporarily mess up your credit rating. What you should do to try and avoid such a situation is to provide a written clarification of the circumstances regarding the problem and include it to your loan application.

In case the problem has been solved and your payments have been made on time for a year or more then your credit will probably be judged as agreeable. But something that harshly harms your credit status is chronic late payments and judgments or loan defaults. It may even put a stop to your obtaining any loan in Phuket at all. You should be ready to provide all facts and copies of applicable documents and papers if you have been through bankruptcy or foreclosure proceedings in Phuket within the last seven years.

If you are obligated to pay alimony, child support or separate maintenance then you will need to explain all the factors in detail along with your application form as these requirement are thought of as debts.

Additional Information
In order to certify the fact that the information that you have provided is correct to the best of your knowledge and in order to promise to advise the bank in Phuket of any material changes in the information on; and your consent to (1) verification of the application data, (2) submission of account history to credit reporting agencies, and (3) transfer of the loan or loan servicing to successors to the original lender in Phuket, you will have to sign a section of the application form.

The information on the gender and race of the applicant is asked for in the last section of the form. It is this piece of information that the Federal Government uses to supervise lenders’ compliance with fair housing and equal credit opportunity laws. On your own part it is strictly voluntary to provide this information and it is not going to effect your application in any ways. The lender in Phuket is, however, required to request for this piece of information under the federal law.

The lender in Phuket may always require additional information or certification concerning you or the property in Phuket. Even though the loan officers try their best to collect all necessary data while the form is filled up it is not possible for them to predict all necessities. And so if additional information is asked for you should provide those as fast as you can, without fearing that the worse has happened.

You are likely to be asked to pay for the credit report and appraisal fees for the property in Phuket when you are applying for the mortgage loan. These fees will run up to $500 but it depends much on the locality and the type of the loan that you are applying for.

The loan officer might just be able to pre-qualify you for the loan that you requested base on the details and information provided by you but they surely cannot approve any loan. After the necessary documents and details are received and verified the lenders’ underwriters approve the loan.

After The Loan Application
You might want to know what happens after you finish and submit your loan application form. It will be send to the lender’s loan processing department and then to the underwriter in Phuket. The decision of whether to approve or reject the loan will be made over here. Then the loan processors send out the Verifications of Employment and Deposit and order the credit report, the property appraisal in Phuket and other documents. The amount of time that is required for the loan to be approved depends on the time it takes to receive these documents. It may take much longer to receive the credit and employment information if in case you are transferring from out of the local community in Phuket. Processing times always differ from one lender to another. But the loan officer would try to give you a hint of how much time it will take to process your application and get your loan approved for your property.

The lender in Phuket should provide you with a Good Faith Estimate of the estimated closing costs within three business days after completing the application process. It will show costs associated with the loan settlement, such as origination fees, mortgage insurance, title insurance, escrow reserves and hazard insurance.

You are also going to receive a Truth-in-Lending Disclosure statement within these three days. The expected monthly payment as well as the total cost of all finance charges on your loan, stated as an Annual Percentage Rate (APR), will be shown in this particular statement. The APR represents the dollar amount of finance charges you pay either up front or over the life of the loan, converted to an annual interest rate. The APR is usually higher than the interest rate on the loan as it includes origination fees and other charges as well as interest on the mortgage loan.

You will receive a commitment letter after the bank in Phuket has approved your loan. This letter sets out the terms of the loan and the length of time for which those terms are offered. The terms are of course subject to change if the loan does not close within the specified commitment phase. You are to accept the commitment by returning a signed copy to the bank in Phuket within five to ten days. You also might have to pay part or all of the origination fees at this time. You should read the letter very carefully as you still might need to satisfy certain conditions mentioned in the letter.

The lender in Phuket may give you a verbal consent instead of sending a letter if the closing is scheduled soon after the approval. You need to understand all the terms and conditions clearly. You can be sure that the financing you require from the bank in Phuket is assured once you receive this letter and so now you can focus on completing the very many details needed for the final settlement.

The time phase between the submission of the loan application and receipt of the commitment letter is one of uncertainty and concern. Anything from a request for additional information or any unexpected delay and lack of communication or other minor problems can increase the anxiety to a great degree. But this stress can be reduced as well.

You should remember that it is the bank in Phuket who wants to make the loan and that the underwriters in Phuket are willing to approve the applications. If you have finished the application process successfully and if your loan officer in Phuket is fully satisfied, then you have nothing much to worry about.

Keep the lines of communication with your lender in Phuket open. You can get information about the status of your application form in the processing department from your loan officer in Phuket or someone at the department. It might take several weeks to process the application and therefore you ought to be patient.

Make yourself accessible in case the bank needs more information about you. Use your real estate agent to inform you if you are living outside Phuket. A faster response from your side will definitely speed up the process. For your protection as well as that of the lenders mortgage loans require much more paperwork and legal documentation than an automobile or other installment loan, and so be sure that the lenders in Phuket do not ask for more than what is absolutely necessary.

Getting a mortgage loan for your new home in Phuket should not be such a big ordeal to actually lessen the excitement of acquiring the home. When understood clearly the process in not that complicated and it just takes you a lot closer to your new home in Phuket.