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Strong Loonie Flying South

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By : Lina Horner    99 or more times read
With the Canadian dollar (the Loonie) equaling the value of the US greenback, more and more Canadians are choosing to invest in real estate south of the border.

The recession in the United States has sent housing prices spiraling downward to the point where, in some instances, the purchase price of a nice condo near the beach in sunny Florida is comparable to the price for a parking spot in Toronto. A recent investor from Toronto paid $54,000 for a condo in upscale Naples, Fla. Compare that to the $55,000 price tag for an extra parking space at the soon to be completed Ritz Carlton residences in downtown T.O. and it's easy to see why the U.S market is so appealing to its northern neighbours.

The real estate market in the United States has been one of the hardest hit sectors since the economic downturn began and the value of properties have decreased to the tune of 70% in some regions. This translates into great news for Canadian investors who, according to the U.S based National Association of Realtors, were the number one foreign purchasers of property in 2009, weighing in at 11% of all international purchases.

There are many things to consider before making the leap into the U.S market, one of them being the difficulties associated with obtaining a mortgage from an American bank; this is why nearly 50% of Canadian homebuyers in the U.S pay with cash. Those wishing to take on a mortgage for their new property may be faced with a down payment requirement of 35-40%, along with a myriad of stipulations that make the process anything but easy. Having to set up a U.S bank account with enough funds to cover at least 6 months of mortgage payments, property taxes, and insurance is just one of the obstacles to buying a place in the sun. There are also problems when the time comes to sell or if the owner dies. One expert states "buying in the U.S is comparable to marriage and divorce. When you marry, that can be easy, but divorce is complex and takes time". It may seem easy to buy, with many mortgage companies catering to Canadians, but to sell is not as easy with all of the state and federal laws to satisfy.

If you are fortunate enough to be able to meet the stringent requirements there are many advantages to owning a property stateside. For instance, the swell in property foreclosures has led to an increasing number of renters entering the market, making it easy to find qualified tenants for your investment property. Additional advantages include the ability to get a fixed mortgage rate for up to 30 years, and no early payment penalties.

While there are pros and cons for purchasing real estate in the U.S, there is no denying the time is right for Canadians to make a move towards purchasing investment, retirement, or vacation property south of the border.
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