ITIN Mortgage Loans: Why Are My Rates Much Higher On A Car Loan?
If you’ve shopped for a car and a home loan, you saw a big difference. We’ll explain why rates are much higher on a car loan than a mortgage loan.
Thanks to the internet, we can shop around for interest rates on loans, cars, mortgages, student loans, personal and business loans right from our phones or laptops. There is no paperwork involved, and doing so doesn’t impact our credit score.
If you’ve done so, you might notice that when shopping for a mortgage loan, the rates were much higher on car loans. We’ll explain why that is, how to get home loans without a Social Security number, what mortgage loans with ITIN numbers are, ITIN loan programs, and what ITIN wholesale lenders are.
Buying homes for non-citizens
The good news is that you don’t have to be a citizen to buy a home or a car. Nor do you have to be a citizen to get a loan for either.
Mortgage loans versus car loans
At the time of writing, the average auto loan interest rates are 3.64% for new cars and 5.35% for used cars. For home loans, the rates range from 2.994% to 3.873%, depending on the type and length of the mortgage.
These are just averages; there are other factors that impact the interest rates you’re offered on loans, not least of which is your credit score.
It might seem strange that a much bigger loan, a mortgage has a lower interest rate than an auto loan. The primary reason for that is collateral. Both loans have collateral; if you fail to make payments, the bank will repossess your home or car.
Homes typically increase in value over time, while vehicles quickly lose value apart from some rare vehicles that become collector’s items. New cars lose 20% of their value in the first year and another 10% each year after.
So while your repossessed home is valuable to the lender, your vehicle really isn’t. Therefore, auto loans are risky for them, so the interest rates are higher than home loans.
Home loans without a Social Security Number
While you don’t have to be a citizen to buy a home, it is helpful to have an ITIN. In fact, there are dedicated ITIN loans. ITINs are issued to resident and non-resident aliens who aren’t eligible for Social Security Numbers and used for tax-reporting purposes.
Some lenders offer ITIN mortgage loans or Tax ID mortgage loans. They basically work the same as a standard mortgage but don’t require citizenship or an SSN. You make a 10%-20% downpayment and have a 30-year fixed-rate mortgage.
ITIN mortgage loan rates have a drawback; they’re typically higher than those for standard mortgages.
ITIN loan programs
If you’re a first time home buyer with an ITIN, there are some things you can do to increase your odds of being approved and getting the best interest rate possible:
First, acquire an ITIN if you haven’t. Having one makes it easier to qualify for a mortgage.
Build or improve your credit score. The better your score, the lower your interest rate. A score of 760 or higher is typically required to get the best rate.
Find a real estate who is experienced working with non-citizen clients.
Find a lender that offers ITIN mortgages. In some cases, you may be dealing with a wholesale mortgage lender.
Gather the financial documentation lenders will require, including but not limited to a few years of tax returns, proof of income like pay stubs and W2s, bank and investment account statements, and rental payment history.
Upwardli was created for you
We created Upwardli to help those newly arrived in the U.S. navigate our personal finance system. We can help you find the right tools and reliable providers that you need to build your new life.
