Financing through the banks is available in Costa Rica, but it is a time-consuming process that requires a lot of paperwork, can become costly and frustrating. It is difficult to borrow funds from a Costa Rican bank, but there are other options.
Below is a brief overview of your options in which your attorney will represent you in the process.
If you have found the home you'd like to purchase but do not have the full amount to cover the cost, owner financing may be an option for you.
The majority of sellers require 50%-60% of the purchase price as a down payment, and they will finance the remaining 40%-50%. Loans are generally for a period of 3 to 5 years with the average interest rate ranging from 5%–7%, depending on the owner, but possibly can be higher. Terms vary with owner financing and can always be negotiated, and in most cases, there is not a lot of room to negotiate the sale price.
At the time of closing, the title of the property will be registered in your name, but there will be a lien put against it, and if you default on your payment, the owner will be able to repossess the property. As the buyer, it is your responsibility to pay the costs of setting up the loan with your lawyer. You can consult your lawyer for the cost of setting up a loan.
Equity Line of Credit
The majority of clients will obtain a loan or home equity line of credit or refinance your present mortgage in your home country. Do you have equity in your property? This could be an option to consider, but I recommend to check with a financial advisor first.
Self-Directed IRA using your 401(k)
If you have a 401(k), it is straightforward for you to roll it over to a self-directed IRA without paying early withdrawal penalties or pay taxes. I recommend using NuView who will act as your custodian to your IRA. Financial advisors may tell you that you cannot use your IRA or 401(k) to purchase real estate. Advisors may try to get you to move money into a real estate trust or fund. Usually, it is done because they are unaware of this strategy, and there is no monetary incentive for them. NuView will work with you to set up your custodian account with you paying annual fees for maintenance and fiduciary duties
Cash is the easiest way to go!