Immigrants pay high interest rates for mortgage loans in the United States

Many immigrants come to the United States to achieve the American dream. Part of the American dream is to purchase a home and to increase one’s financial well-being. In the past, some immigrants may have turned to family members or close friends who were in the United States so that they could legally obtain a mortgage for them. Today more immigrants are able to obtain mortgages on their own without having to turn to family and friends. Because mortgage companies do not require buyers to have a Social Security number to purchase a home in the United States, non-citizens now have more opportunities. Immigrants wanting to buy a home need to have a special tax ID referred to as the ITIN. An ITIN, or individual tax identification number, is proof that an individual pays taxes to the IRS or Internal Revenue Service. The IRS began issuing ITINs in the mid 1990s for individuals who were not eligible to obtain a Social Security number but needed to declare their income and pay taxes. Obtaining an ITIN, a nine digit number for tax purposes, is a relatively easy process since legal residency in the Unites States is not a requirement. A large number of illegal immigrants seeking to become permanent residents obtain ITINs in order to show the USCIS in the future that they have been paying taxes while residing in the United States.

Mortgage companies typically use the Social Security numbers of applicants to run credit histories. However, many who apply with an ITIN do not have an established credit history or any credit history at all. Cash is widely used by immigrants and most of their transactions will most likely not involve credit. As a result, the approval for a mortgage loan may take longer and be more expensive. Immigrants applying for a loan must show proof of income. In addition, they have to prove that they have been consistent with bill paying. Mortgage companies tend to take higher risks with immigrants and this risk is usually leveled off with a higher mortgage interest rate. Illegal immigrants cannot obtain loans that qualify for repurchase or are insured at the federal level by corporations sponsored by the government. These types of loans tend to offer the lowest interest rates available and lower down payments.

Immigrants must also keep in mind that while they can obtain an ITIN number, they are still not eligible to obtain a SSN. As mentioned before, obtaining an ITIN may be useful in the future when applying for permanent residency in the United States. Having an ITIN shows that an individual has been paying taxes on their income earned in the United States, which is one of the criteria that is looked at by the USCIS if applying for citizenship in the future.