When my husband and I moved full-time to Mexico about a year ago we discovered that buying a home in Los Cabos is different than in the U.S. Very different.
We purchased our home in Cabo San Lucas just under a year ago and I can tell you the whole experience was nerve wracking at times because we didn’t know the steps. But it was also incredibly exciting as we were buying our dream home. What really made the difference was the help we received along the way.
I’m now working in real estate in Los Cabos and am using my purchase experience to help my U.S clients understand the buying and selling process. While there are similarities to buying a home in the States, there are some very different and important distinctions when you buy property in Los Cabos, especially in the closing process. But as you go through it, just remember the prize at the end!
One big thing to understand is that purchasing property in Mexico is safer than ever before. Within the last 20 years, Mexican real estate has become a lucrative and viable investment strategy. U.S. title insurance, third party escrow, comprehensive title searches, inspections and due diligence periods are now the standard.
A key difference, though, is that ownership of real estate in Los Cabos is via an established and perpetually renewable Mexican property trust called a fideicomiso. Most of Los Cabos lies within Mexico’s Restricted Zone. Foreigners cannot legally own direct title to real estate within this zone, which is defined as the land area within 100 kilometers of Mexico’s international land borders and 50 kilometers of Mexico’s coastline. If you purchase property outside of the Restricted Zone, you can hold title to the property.
A second thing I learned by doing is that getting a mortgage is not the norm. While financing a property can be done, the standard U.S. mortgage is not available here. Mexican financing may be available, but if you go this route the closing process will take quite a bit longer and the interest rates are high. If financing is important to you, you can look for properties that offer seller financing. Or you can look at new developments, which often offer some kind of financing. But even new developments generally require a sizeable down payment and higher interest terms. The bottom line is that you will not find the kind of 15-year or 30-year low interest mortgages available in the States.
Another difference is that the closing time line in Mexico is “estimated.” I use that term loosely. I was used to buying in the States where you know the timetable and the dates get locked in stone. Not so here in Los Cabos. This is where we started to stress out because we just wanted it to be done. But patience is key.
It generally isn’t until the last couple of weeks of the closing process that the final date can be determined, and even that can change. But the good news is that if you are living in the States while this is happening, you can authorize a limited power of attorney to someone you trust to sign the deed transfer. The other paperwork can be handled electronically. Otherwise, you might find yourself booking flights for a closing date and having to change them multiple times. Again, patience.
These are just a few of the differences between Mexico and the U.S. when it comes to buying a home or property. I highly recommend that you spend time finding a good real estate agent that knows the ropes and can guide you through the process. It will take a lot of the stress and worry out of buying a home in Los Cabos.
Don’t hesitate to drop me a note if you have any questions. Until next time, enjoy Mexico @cabolife.
