Buying a house on an H1B visa is a long term decision and depends highly on your base location/ City.
It may or may not always be the best investment due to the high property taxes.
- Some locations like Boston, New York City, and Bay area (in California) are extremely expensive to buy a house but may be able to give you a profit when you sell your house.
- Other locations like Dallas (Texas), Tampa (Florida), Raleigh (North Carolina) may not be fruitful as they all have land available to expand horizontally. More ground area is generally responsible for low price appreciation for the housing market.
If you do not stay in the house for at least 5 years, it would be really difficult to break-even the money you may have spent (think of maintenance, home insurance, property taxes, monthly EMI).
Did you know that Real estate agent Cash back is not taxable in US?
Buying Home in Corovirus Recession
Buying a house in the COVID-19 recession could be really profitable if you can grab a good deal.
- Many developers are under pressure in markets primarily occupied by Chinese and Indian buyers in places like Frisco, Plano, Mckinney, and Irving in DFW metro.
- We have observed a reduction of about $40k-50k in the prices of homes in the range of 550k to 650k as the buyers are scared of their jobs.
- The same pattern is visible in the Atlanta housing market too.
If you have a stable job, the good time to buy a house would be Oct 2020 as per my opinion. The US economy is under recession which started in Feb. The chances of market crash are high and you should be very careful before signing any ‘under construction’ home contract.
Banks have also increased the credit score requirement to a minimum of 700 and have made 20% down payment mandatory to get a mortgage.
You can buy a house in the USA with an H1B visa by paying only a 5% down payment.
Many people that we spoke to, have informed us that even though they are buying a new house and taking a mortgage, they are only putting in 5% as a down payment.
This too, when they can actually pay 20% and avoid the PMI insurance.
They are basically trying to keep as much money with them as they can, in the highly unstable environment when your H-1B extension / Amendment or Transfer can be rejected without ever issuing an RFE!
You owe money to the bank as long as you own the home. The visa denial does not relieve you from the responsibility of paying back the home loan in the USA.
You have to keep paying the mortgage installment, home insurance, maintenance, and property taxes even if your H1B extension is denied.
It does not matter how you pay it. Bank wants their money back and the government wants their taxes.
If you have to go back to your native country immediately in case of H1B extension cancellation, there are not many options available to you. You have to follow immigration law and leave the country immediately.
You can rent out the home even though you are not physically present in the USA. This is allowed legally.
If you do NOT want to rent, then you should sell it unless you have enough savings to pay monthly bills to keep that house and keep paying monthly EMI.
You can use a power of attorney in favor of your friend or relative in the USA to sell the house.
You can apply for a B1/B2 visa with a reason to sell your property in the USA.
That’s a legitimate purpose but, the visa may or may not be given based on the visa officer’s analysis of your case.
Your credit history will certainly take a big dip and you will have problems fixing it in the future (if at all, you come back to the USA on a work visa).
Your house will be taken over and foreclosed by the bank.
Is Short Selling House a Good Idea?
You may have to short sell the house at a much lower price if you want to leave the country quickly.
If the H1B extensions are indeed canceled sometime in the future, there is a good chance that the housing market will collapse.
You might just lose all the value if you have to go back.
Nevertheless, you can appoint an agent in the USA (legally allowed) to arrange for tasks like initiate, conduct, or finalize the sale of the property.
You do not have to be present in the United States physically.
The final sale agreement that needs your signature can be sent to you wherever you might be (like India or China), and signed there and sent back to the USA.
Safe Price Range
After speaking to more people who are currently working on an H1B visa, I have come to the conclusion that staying below 350k mark is a safe zone if you really want to go ahead with buying decisions.
- Demand for houses above 350k mark normally goes up when the economy is doing good but drops substantially after the economic downturn.
- Selling, in case your visa extension gets rejected may result in losses.
So, it is advisable to stay within budget and controllable mortgage payments (like less than $2k per month) that you can easily manage even from your home country job.
Try to stay away from a future situation that may force you to short sell your house when you are not able to pay monthly property taxes + mortgage payment, as it is too high to support from your home job.
Do you have any experience to share? Your opinion is most welcome and appreciated in the comments section below.