Foreign National Mortgages: A Guide to Real Estate Investing in Mississippi

Optimize Your Mississippi Real Estate Investment with Waltz

If you are a foreigner interested in investing in real estate in Mississippi, Waltz is proud to offer a range of solutions. Whether you are looking to secure a lower interest rate, shorten your loan terms, or even free up equity for future real estate investments in Mississippi, our team is here to offer tailored solutions to meet your needs in a dynamic real estate market. Keep reading to learn more about Mississippi real estate investing and how it can provide a good foundation for your financial future.

We are providing the following discussion to you for informational purposes only.  All investments, including real estate, involve risk, and we encourage you to invest carefully. The information in this article is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice or service. You should consult with a professional in the respective legal, tax, accounting, real estate, or other professional area before making any decisions or entering into any contracts relating to a rental property.

Understanding Foreign National Mortgages

A foreign national mortgage is a type of financing developed exclusively for foreigners or non-US residents looking to buy property in the United States. Waltz is happy to help you obtain these mortgages, which are specially tailored to the specific demands and conditions of foreign investors. These take into account the various financial, legal, and regulatory landscapes in the state of Mississippi. 

It’s important to note that this type of financing has slightly different terms than those offered to US residents, reflecting the increased risk assessed by willing lenders. That’s why it’s so important to work with Waltz to understand your mortgage options and use them effectively. Contact us to learn more.

Benefits of Investing in Mississippi Real Estate

There are a variety of reasons that Mississippi is becoming popular for foreign investors looking to invest in real estate in the US. 

First, real estate in Mississippi presents a lucrative opportunity primarily due to its affordability. As the state's cost of living is one of the lowest in the US, the state is poised for population growth, as Americans move from larger, more expensive states to Mississippi. 

Another factor that affects investors is the triad of growth seen in various sectors such as technology, healthcare, and manufacturing. Nissan and Toyota, for example, have established large manufacturing plants in Mississippi, which have helped boost the local economy. In fact, Toyota’s investment alone has created nearly 4,000 jobs and invested over $1.2 billion in the state’s economy. 

Furthermore, the unemployment rate in the state has dropped to 2.7% as of July 2024, reflecting a strong job market that supports housing demand. More infrastructure improvements and business-friendly policies are expected to sustain economic growth and real estate market stability in the near future.

Finally, property taxes in Mississippi are low compared to other US states. The average effective property tax rate is 0.75%, which means that the average tax payment is just $1,097, less than the national average of $1,682.

Specific Considerations for Mortgages in Mississippi

Mississippi presents unique factors to consider when investing in real estate. Here are some additional considerations beyond natural disasters and market variations:

  • Historic Preservation: Mississippi is home to several historic towns, such as Natchez and Vicksburg, with strict preservation regulations. These rules can affect renovation costs and influence potential property value increases, especially in areas with rich historical significance.
  • Flood Insurance: Due to Mississippi's proximity to the Gulf Coast and its river systems, flood insurance is often required for properties in flood-prone areas. Mississippi's average flood insurance cost is around $952 annually, which is higher than the national average of $819. It’s crucial to factor this into your overall investment costs.
  • HOA Fees: Many residential communities in Mississippi are governed by homeowners' associations (HOAs). These fees can add to the monthly cost of property ownership and may also include restrictions on property modifications or activities. Mississippi has the seventh-highest HOA fees in the nation, taking $4,750 out of your pocket every year.‍
  • Coastal Concerns: If you’re investing in coastal areas like Gulfport or Biloxi, it’s essential to be aware of coastal erosion and hurricane risks. Properties near the coast may face erosion issues, which could affect property values and require preventative measures.

Which Mississippi Cities Offer Strong Investment Potential?

Mississippi offers real estate investors appealing opportunities, thanks to its rich history, scenic landscapes, and growing economy. Here are some of the state's top investment markets:

  • Jackson: As the state capital, Jackson features a diverse economy, affordable housing, and a growing demand for rental properties. Over 32,000, or 52%, of Jackson households are renter-occupied. Plus, the city is a hub for healthcare, manufacturing, and government services, making it a solid choice for long-term property investment.
  • Hattiesburg: Hattiesburg combines cultural appeal with strong educational and job opportunities. The city is home to the University of Southern Mississippi and William Carey University, with the former drawing 15,000 students and boasting a business program ranked among the top 5% globally. Additionally, Hattiesburg is near Camp Shelby, the largest National Guard training facility in the U.S. These factors make Hattiesburg an attractive option for investors, offering excellent potential for rental income.
  • Oxford: Oxford, home to the University of Mississippi, is a college town with a robust rental market, where 59% of households are renters. The annual influx of students ensures a steady demand for rental properties, while the city’s charming downtown and cultural attractions enhance its investment appeal. Additionally, home values in Oxford are rising rapidly, with sale prices increasing by over 22% in the past year.‍
  • Biloxi: Biloxi offers beautiful beaches, casinos, and historic landmarks, making it a prime destination for real estate investors. Its strong tourism industry and growing economy provide excellent short- and long-term rental potential. The city is steadily expanding, with the 2020 Census showing a 12% population increase since 2010. This growth is expected to continue as people move from higher-priced states like Florida and Texas, drawn to the similar climate and lifestyle of the Mississippi Gulf Coast.

Types of Mortgages Available for Foreigners Investing in Mississippi

  • DSCR Loan: Debt service coverage ratio (DSCR) loans make it easier for foreign investors to buy US rental properties. Unlike traditional mortgages that heavily rely on a borrower's personal income and credit, DSCR loans focus on the property's ability to generate income. By focusing on the property's income-generating potential rather than the investor's personal finances, DSCR loans eliminate the traditional hurdles often faced by international buyers. Waltz specializes in DSCR loans for foreign investors. Contact us to get started.
  • Non-Resident Conventional Loan: These loans offer competitive rates but typically require a higher down payment (often 30% or more) and may not require a U.S. credit history.
  • ITIN Loan (for certain non-residents): This program allows qualified borrowers to use an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. It often has down payment requirements around 30% and may have specific requirements for employment and income verification.
  • Jumbo Loan (for high-value properties): Jumbo loans are for mortgages that exceed $766,000, and sometimes over $1 million. These programs are more exclusive and cater to foreign investors with substantial assets and strong financial profiles.
  • Hard Money Loan: This is a short-term option from private lenders. It can be useful for quick closings but comes with higher interest rates and stricter terms.
  • Fixed-Rate Mortgages: These are the most common type of mortgage, offering a fixed interest rate for the entire loan term (typically 15 or 30 years). This provides stability and predictability in monthly payments.   
  • Adjustable-Rate Mortgages (ARMs): ARMs offer lower initial interest rates, but the rate can adjust periodically based on a specific index. They can be a good option for borrowers who plan to sell or refinance the property before the interest rate adjusts significantly.   
  • Interest Only Mortgages: With an interest-only mortgage, you only pay the interest on the loan for a specified period. The principal balance remains unchanged. This can result in lower monthly payments, but you're not building equity in the property during this time and the entire principal balance is due at the end of the interest-only period.
  • ‍Balloon Mortgages: A balloon mortgage is a short-term loan with a large final payment due at the end of the term. The monthly payments during the loan term are typically lower than a traditional mortgage, but the balloon payment can be substantial.

Process of Refinancing for Foreign Nationals in Mississippi

Refinancing your Mississippi investment property means carefully replacing your current mortgage with a new one. This entails taking out a mortgage to use the equity in their residences to fund new investments. 

Waltz offers comprehensive and effective solutions to ease this process for foreign nationals with a Mississippi investment property. Our knowledge ensures that you may securely and successfully optimize your Mississippi investment rentals.

The refinancing process for foreign nationals generally involves:

  • Determining your property's current market value
  • Exploring different loan terms and interest rates to find the best deal
  • Preparing financial documents, including income verification and property ownership proof
  • Completing the application process
  • Once approved, finalizing the refinancing transaction

Exploring Refinancing Options for Foreign National Mortgages in Mississippi

At Waltz, we provide this option to foreign investors across Mississippi as it allows you to access your property's equity. This is beneficial as you can borrow more than the current mortgage balance based on the original equity. In turn, the additional funds can be utilized for various personal objectives—- including but not limited to debt consolidation, or a down payment, new upgrades and even new properties.

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Rate-and-term refinance

This option can be quite attractive for foreign investors in Mississippi as it allows you to adjust the terms of your current mortgage. This can potentially result in a better deal on your home loan, optimizing your investment in real estate in Mississippi. Please note that even if you refinance an existing loan at a lower interest rate, your total finance charges may be higher over the life of your loan.

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Cash-out refinance

Tax Considerations for Foreign Nationals with Mississippi Real Estate Investments

Seeking advice from a tax expert is always a smart move. Please note, this does not constitute legal or tax advice. Understanding the tax implications of owning Mississippi real estate is essential for foreign investors. Key tax considerations include:

  • Property Taxes: Mississippi imposes an average effective property tax rate of 0.75%. This is lower than many other states, presenting a financial advantage for foreign nationals who want to invest in Mississippi real estate. 
  • Income Tax: Mississippi leverages a flat 4.70% income tax rate for foreign nationals with Mississippi real estate. 
  • Federal Income Tax: Rental income from your Mississippi property is subject to federal income tax.
  • Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your investment property in Mississippi, you may be subject to FIRPTA withholding, which requires a portion of the sale proceeds to be withheld for potential U.S. capital gains taxes.
  • Transfer Tax: Good news: Mississippi does not impose a transfer tax if you decide to sell your investment property. 

Waltz Will Help You Invest in Mississippi Real Estate

Want to invest in Mississippi real estate? Waltz can help! We have the expertise needed to help you build a successful real estate portfolio in Mississippi. We are well-versed in foreign national mortgages and have a deep understanding of the Mississippi market, providing a solid foundation for your investment journey.

Our Mortgage comes with an Investor Kit that simplifies the process in just a few clicks.

  • LLC Formation: Protect your assets and simplify property management with a custom-tailored Mississippi LLC.
  • EIN Acquisition: Obtain an Employer Identification Number (EIN) to open a U.S. bank account for property-related finances.2
  • Operating Agreement: Streamline ownership and management with a professionally crafted operating agreement.

Plus, after purchasing your Investor Kit, Waltz offers loans with up to 70% Loan-to-Value (LTV).3 You'll also have the opportunity to open a U.S.-based bank account through Waltz to manage your property's finances.

Contact us today to start the journey of buying your Mississippi investment property!

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