Dennis and Diane Banash, a retired teacher and parks administrator in Selkirk, Man., have made Sarasota, Fla., their beloved second home.
Over the past decade, the couple have traveled south of the border every winter to take a break from the unrelenting cold.
“We are less than 10 minutes from the Gulf [of Mexico]. It’s busy, but you can find your pieces of paradise,” says Diane.
The Banashs are not alone. Last year, Canadians purchased $10.5 billion in U.S. real estate, according to a National Association of Realtors study.
“The market is good,” says Alain Forget, head of business development at RBC Bank (U.S.). The No. 1 state for Canadian buyers is Florida, followed by Arizona and southern California.
Forget notes there are definitely things to think about before embarking on this process.
For one, emerging Snowbirds should visit the area they’re interested in moving to. “A lot of those markets, places in Florida and Texas for example, offer different types of communities and different lifestyles.”
For the Banashs, they were enamoured by the beach.
“We needed to get out of winter and we needed water. Not [somewhere dry like] Phoenix,” says Diane.
While the couple is happy with their decision to buy U.S. property, they had difficulty getting a mortgage.
Forget says this is a common challenge because U.S. banks often require Canadians to have U.S. credit history.
“Most American banks will not grant a U.S. mortgage to a non-citizen,” he says.
If you go with RBC Bank, you can use your Canadian credit history to secure a U.S. mortgage.
Another route is to take a home equity line of credit on your Canadian property, Forget says. The challenge, though, is that you’ll pay hefty foreign exchange fees up front if you buy the property outright.
In the case of RBC Bank, Canadians can get a cross-border U.S. mortgage on a second home for up to 80 per cent of the purchase price. This dramatically reduces the up-front impact of exchange fees. The remaining 20 per cent can come through that home equity line of credit, he says.
Canadians seeking a home in the Sunbelt should also use a mortgage calculator and get pre-qualified before they speak to a bank, says Forget.
Some banks, such as RBC Bank, have a quick online tool in which Canadians can receive a pre-qualification letter within a day or so.
For Snowbirds who aren’t retired, purchasing a property several years before they leave work and putting it up for rent will help generate income to pay off the mortgage, Forget recommends.
Buyers also need to be aware of special insurance requirements, such as flood insurance in hurricane-prone areas.
Retired teachers Terry and Jean Rudge of Red Deer, Alta., rented a place for several years in Weslaco, Texas before they made it their permanent winter escape.
During the process, however, they experienced unforeseen financial issues.
Terry laughs at the absurdity of paying property taxes on their place in Texas. “They wouldn’t take a credit card. We had to use USD $20 bills to pay the tax.”
Forget says Canadians should seek a U.S. bank that understands Canadians and can provide mortgage-funding solutions. RBC Bank has cross-border banking services tailored specifically for Canadian needs.
Both couples say the experience has been worth the hiccups.
“We have had a really great time avoiding the snow and ice…and we have met a lot of nice people,” says Terry.
Are you a Canadian moving to or living in the U.S.? Simplify your financial life and save money with cross-border banking advice and solutions from RBC Bank. Learn more here.