Financial Needs When Moving to the USA

15th February 1999

When I came over here, I had been told to bring financial details. I didn't really know why, and I didn't really know what to bring. So I ended bringing not enough. I had to get more shipped over from Australia, and even then I didn't have all I needed. If anyone else coming over here, here's a checklist of stuff to bring, what you need it for, and why.

Car Insurance

To get car insurance, all you really need is a USA driver's licence. If you want to buy a car quickly, then you need your social security number as an absolute minimum, then have an International Drivers Licence. These should be available at NRMA or RACQ or any of the motorists' organisations in Australia. If you don't have one of these, a very few insurance companies will let you do it on an Australian licence. Phone around until you find one. Be prepared to go for minimum cover to keep the cost as low as possible.

Did I mention that you should get your Australian drivers licence renewed just before you leave?

To get really cheap insurance, bring evidence that you have had car insurance in Australia. Like two years worth of insurance bills, preferably ones that show you have full no claim bonuses. Wave these in front of the insurers here, and you get low rates immediately. If you don't bring these documents with you, then you can still get not bad insurance rates, because a check on your social security number will show no offenses or accidents or problems.

Remember when you're driving, that a parking offense or a speeding offense or an accident will increase your insurance premiums for the next few years. A parking offense can cost you an extra couple of hundred dollars next year. Don't even think about it.

Mortgage

You arrive in the country and you want somewhere to stay. What to do? You have about 5 options.

Stay with friends or relations. This is the easiest way to get established. You don't have to get a credit check, it isn't going to cost you a fortune, and it gives you time to get all the important documents and bits of paper together, and it might even give you time to develop a credit rating. It can also sour friendships, so use this carefully. And it could be a problem in proving residency when applying for your drivers licence.

Stay at a cheap hotel. Even at a cheap hotel it's going to cost you. Only do this if you have lots of money.

Stay at serviced apartments. This is costly and it's small. If your boss is paying, then grab the apartment. Stay as long as you need to.

Rent a house or apartment. Now it gets trickier. Unless you rent in an area that you don't really want to live in, you are going to have a minimum lease contract of 12 months. You are going to rent for 12 months. That's a long time where your rental money goes into someone else's pocket. At about $1,200 US a month, that's about $14,400 US of your hard-earned money wasted in the first year. And it's difficult to get into a rental house because you need credit references. And two months rent up front. And a non-refundable bond of a couple of hundred dollars if you have pets. The hardest part is getting through the credit checks. You normally won't have a credit rating when you arrive in the country, so this will be tricky. The second hardest part is wasting all that money.

So you decide to buy a house. And yes, you can buy property in the USA even if you are an alien. You might even later be forced to leave the country, but you can still own the property. What's even weirder is that often you qualify for a FHA mortgage, where the USA Government guarantees your mortgage. I'll repeat that: the USA Government will guarantee a mortgage to an alien, if the alien qualifies. How bizarre is that?

So what do you need to qualify for one of these? You need income and a good credit rating. Does this sound familiar to those who have previously heard my mantra about the 3 things I most admire in a woman? Income, property and a good credit rating. Well the income and the credit rating let you acquire property. It all fits together. So what you have to do is acquire a mortgage broker. This is a person who will gather data on your behalf, put together a good case, and present it to the money lender. If he has done his job well, and if you are worthwhile, then the lender will agree to give you a mortgage and the Government will agree to back that mortgage. Mortgage brokers are easy to come by. Every real estate agent has a pet one. So if you are feeling virtuous, go out and find a house to buy. Acquire a mortgage broker. Talk to him and give him good news. He will produce a piece of paper that says he believes you will qualify for a mortgage. They use this piece of paper to put with the offer to buy. It helps the sellers believe that an alien can actually buy their property and won't have troubles with the sale.

The next step is to prove that you have income and good credit rating. And this is where you need documents. And this is the list I am going to give you.

Cash

First of all, you need cash. Don't even attempt to come over here without about $20,000 US in cash. Take the legal amount of cash with you out of the country. You'll need it to get around. Don't arrive with $100 US in your pocket and hope to survive. Get the rest of your $20,000 transferred over here as soon as you get a social security number and get a bank account opened. When you do this, keep all records pertaining to that money. You will need this for a house deposit, and they want to see a paper trail to prove that the money is really yours.

Income

You have to prove that you currently have an income. To do this, they want to see at least 2 pay slips from your USA company. This shows your gross, and how much you have left after tax and deductions. In addition, get a letter from the employer stating your salary. That's the US side. They also want to see that you were gainfully employed in the old country. You will need the last two tax return statements that come back with the ATO refund cheque or the demand of money with menaces. They will also want a few of the last payslips. The last payslip will be atypical because of termination pay, but three or four from before that will be fine. And to help explain things, throw in a copy of your resume and the reference you got from your last employer.

Previous Property

So you have property in Australia and you are going to rent it out instead of selling it. Boy, you really have to collect some paperwork. It would be a lot easier to sell up in Australia and bring the money with you. Then you will have enough cash to buy a house outright and avoid all this hassle.

They want to know about your mortgage. So you have to supply full details, like the name of the bank that holds your mortgage, the address and phone number of the bank, and preferably the name of someone to speak to. If you were hoping to keep your move a secret from the bank to avoid investment interest charges - forget it. They are going to find out. You have to supply the bank account number of the mortgage, plus all your other bank account details at that bank. Plus, they would prefer to see the originals of your complete bank statements for the mortgage. They will photocopy these and carry them away with glee. As well as showing them all these documents, you will have to prepare a statement that shows exactly how much the mortgage costs you each month, including fees, insurance and repayments. If you pay your mortgage fortnightly, don't forget to multiply by 26 and divide by 12. And over here, they look blank if you say fortnight. Try bi-monthly instead.

Then you have to be able to balance this with the rental. Supply them with the name, address and phone number of your rental agency. Let your rental agency know in advance that some US bank johnny will be asking embarrassing questions. You will need copies or originals of the rental agreement with your current tenant, who will hopefully be on a 12 month lease arrangement like here. If it isn't like it is here, they get terribly confused. Prepare a statement that shows how much you actually receive per month from the rental. Make sure that this covers the mortgage pretty well, so don't mention to them that it has to be taxed.

Also, in order to prove that you have equity in the house, get a current house valuation before you leave.

Credit Cards

Give them a complete list of all your credit card numbers and banks. Preferably have the last two credit card statements for each card. They will photocopy them.

Other Assets

Have all documents that show any other assets you have. Get up-to-date statements of your superannuation. Have documents that show shares, like the Telstra or CBA or TAB shares. Get up-to-the-minute share prices for these items and calculate their current value. You have to prove that you have assets and are a solid citizen and these things, no matter how small, show it. They worship small share portfolios over here.

Financial Resume

Finally, prepare a financial resume like your job resume. Set it out with all your details. Show name and address and date of birth and social security number and drivers licence number. If you're married, detail that you are married. Then carefully list your current income details, and your past income details. Give names and addresses of previous employers as they will probably phone them. Then prepare a statement that shows your nett worth. Show how much equity you have in your house. Show that the mortgage is covered by the rental. Show how much you have in superannuation and other assets. Make it look nice, but make it accurate.

Checks

They will get money off you to pay for an international credit check. They hire a company that will track you down in foreign lands and confirm the information that you have given them. If you have done this right, you will be congratulated and you will be offered a mortgage. Because you don't have a US credit rating, and that's all that really counts, you won't get the best deal. But accept it and smile, and one year down the track when you have a good credit rating, renegotiate the mortgage, this time from a position of strength.

FHA Mortgage

The current FHA mortgage is quite interesting. You need 3% deposit, and you pay about 6.5% interest on a 30 year mortgage. A very nice house will cost you about $140,000 US, so you need a deposit of about $4,200. Add in a few extra thousand dollars for closing costs and fees. The monthly mortgage will be about $1,100 which is slightly cheaper than renting.

Summary

If I had known all this before I left, I would have been much better off. If this information helps you, I'm glad.