Retire in Mexico – Investment Strategy
By Doug Jones, President Mortgages In Mexico

I talk to people every week who plan to retire in Mexico, or are already retired and living in their own condo or home in Mexico. There are definitely some things to consider if living in Mexico is in your retirement plans.

For those of you who are already retired and already own a home in Mexico, I often get requests for pulling cash out of their Mexico equity in their real estate. Remember, no matter how much you have in liquid assets or how much equity you have in your property – even after you put a loan on it – you still need to show sufficient income to qualify for your loan. We can count Social Security income, pension income, interest/dividend income, and possibly annuity income. However, as people live in their properties longer, their desire to pull some money out of their home to increase their cash reserves to live on usually increases. Since there are no “reverse mortgages” in Mexico, I have to tell these people that there is no way to get their equity out short of selling their property. Keep this in mind when you purchase your property at the onset. You want to put as little cash into the property as possible and keep the cash in your pocket for future uses. Unlike in the US, the only way to pull equity out is to do a refinance (no equity lines of credit exist in Mexico), and this is an expensive proposition. You have to pay the loan fees (higher than in the US) and Mexico fees, which when added up and means less “net” proceeds from the refinancing of your Mexico home. If this is something you want to consider, you need to do this when you still have a good cash-flow of income. Even if you are still working part-time, it may be the right time to consider pulling cash out rather than wait until your stream of income decreases. Terms of cash-out refinances continue to tighten. We can now only loan 50% of the current value, with a maximum loan of $500,000.

For those of you who are still working and looking to purchase with future retirement in the plans, then again, be sure to put the minimum cash into the property. It is also the best time to get a mortgage loan - while you’re still earning money (either self-employed or a job). By putting down the minimum (20%), you will not run into the dilemma of having too much equity in your Mexico home that you can’t get access to.

If you have any questions on any of this or other questions regarding mortgage financing in Mexico, please contact me at your earliest convenience.

© Copyright 2009 Doug Jones, Mortgages In Mexico– used with permission. Doug Jones is the president of Mortgages In Mexico and is considered by many as the foremost expert in the mortgage field in Mexico. He has been doing loans full-time exclusively in Mexico since Sept 2004. You may contact Doug at doug@MortgagesInMexico.com or call (US/Canada) 918-398-9588, or in Mexico (555-350-6331).