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On the Ask Canada Immigration Lawyer Evelyn Ackah podcast, Calgary immigration lawyer Evelyn Ackah talks with Sean Murphy, a mortgage banker with BMO. Sean specializes in home mortgages for Canadian citizens in the US looking to buy in the "lower 48" and use Canadian income to qualify. Sean and Evelyn discuss programs available for Canadian snowbirds and expats in the U.S. to buy property in the United States.
Connect with Sean Murphy on LinkedIn.
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Here are the key points from their discussion:
Gateway Program for Canadians:
• The program offers more favourable terms, including lower down payments and interest rates.
Assistance for Snowbirds:
• The Gateway program is available for primary residences, second homes or investment properties.
• Snowbirds interested in buying property in the U.S. can benefit from the program.
Challenges for Canadians Buying in the U.S.:
• Sean addresses challenges faced by Canadians, such as higher down payments and interest rates, when considered foreign nationals.
• The Gateway program aims to provide better options for Canadian citizens.
Timeline for Mortgage Approval:
• Sean mentions that the mortgage approval process typically takes around 60 days.
• Documentation conversion from Canadian to U.S. standards is part of the process.
Market Insights:
• Sean discusses the recent changes in the interest rate market, with rates coming down from their peak in the previous year.
• Advises potential buyers not to wait, as market timing may lead to higher home prices.
BMO's Specialized Loan Programs:
• BMO offers specialized loan programs for professionals like physicians and dentists.
• These programs provide tailored options for professionals with specific needs.
Support Beyond Mortgages:
• Sean emphasizes BMO's support beyond mortgages, including assistance with opening bank accounts and other financial services.
• Networking connections with professionals in various fields are available to support clients.
About Evelyn Ackah
Evelyn Ackah is the Founder and Managing Lawyer at Ackah Business Immigration Law. With offices in Calgary, Toronto and Vancouver, we work with individuals and business owners from all over the world who want to cross borders seamlessly. For more information on immigration to Canada or the United States, Ask Evelyn Ackah at Ackah Business Immigration Law today at (587) 854‑3821 or email Evelyn directly at contact@ackahlaw.com.
The Ask Canada Immigration Lawyer Evelyn Ackah podcast by Calgary Immigration Lawyer Evelyn Ackah was named #1 Best Canada Immigration Podcast in 2023 by Feedspot.
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Transcript
Evelyn Ackah:
Good day, everyone. This is Evelyn Ackah from the Ask Canada Immigration Lawyer podcast. I want to wish you all a Happy New Year. This is my first podcast of 2024, and I'd like to welcome my friend Sean Murphy to join us. He is here, he works with BMO, and his focus is helping Canadians who are doing business and banking and buying property in the United States. Welcome, Sean.
Sean Murphy:
Well, hi Evelyn. Nice to see you. Happy New Year. Thank you so much for having me. This is exciting.
Evelyn Ackah:
Well, I'm so happy that you were able to join us because you work for Canadian Bank in the United States.
Sean Murphy:
How about that?
Evelyn Ackah:
And I was like, "We got to talk." So, tell me about what you do and tell me about how that happened and what you focus on.
Sean Murphy:
Thank you. So, let's see, A year ago, I had signed on with Bank of the West. Bank of the West is a regional bank here in the San Francisco Bay Area west region of the country, knowing that they were going to be sold in 2023 to BMO. And myself in the United States, what's BMO? Right? And I get that every day now that I'm working for BMO. What is a BMO? So, it's like BMO? No, it's Bank of Montreal.
So, what happened ultimately is that BNP Paribas, the French Bank owned Bank of the West, they wanted out. BMO wanted to expand into the lower 48. They already have BMO Harris Bank in the Midwest, and now they're looking to expand and grow. Having bought Bank of the West, I had to learn Bank of the West software systems and then transfer it over to Learn BMO systems, but I'm now excited and happy to be a BMO representative in mortgage banking in the lower 48.
Evelyn Ackah:
Excellent. So, you focus on Canadians, is it? Or just all people looking to buy property in the United States?
Sean Murphy:
Yeah. We, as a lender, we are a nationwide residential mortgage lender. I'll say, we do all range of services as banking, okay? But my focus is mortgage lending, owner occupied to four unit properties, anywhere in the 50 US states. So, that's my focus. We do commercial lending, we do wealth advising, we do all the banking services. It's just exciting because in this unique market that we've had the last year, BMO's looking to grow where a lot of big banks are looking to pull back.
Evelyn Ackah:
Yeah. Yeah. And so, it must be harder, especially if you're a Canadian and let's say you want to buy a place in Palm Springs or something, it must be very difficult to get the financing you need because maybe you're not a green card holder. Or maybe, how do you help Canadians when they're looking to get a mortgage that might be different than if they were in Canada trying to get a mortgage?
Sean Murphy:
Yeah, thank you for asking. What happens is, is that BMO US has a Gateway program. It's purely for those who are Canadian citizens that want to purchase in the United States. Traditionally, you would be considered a foreign national, and there will be specific guidelines that you would have to meet, which realistically is going to be a higher down payment and a higher interest rate, and a lot more handcuffs in terms of allowing you to buy property. We as BMO have a conversion program where we allow the opportunity for Canadian citizens to buy with much better interest rates, much better terms to them for considering that option.
Evelyn Ackah:
Oh, that's so good. That is really important. And how about snowbirds? Do you deal with them too, when they're coming down and they might want to buy?
Sean Murphy:
Yep.
Evelyn Ackah:
But they don't live there all the time? How does that work?
Sean Murphy:
Yeah. So, good question. I'd say that this program is available for a primary residence, second home or investment property.
Evelyn Ackah:
Oh, okay.
Sean Murphy:
Okay? So, those snowbirds who do want to move to the US, yes, we can allow, as a second home, the opportunity to purchase.
Evelyn Ackah:
Okay, that's really good to know.
Sean Murphy:
Yep.
Evelyn Ackah:
The reason that I was really interested to talk to you when we first met through our professional network was that, one, you're working for a Canadian bank. Obviously I'm in Canada, I know BMO very well, but as Ackah business, immigration law, we do have a lot of clients who do business and buy properties in the US, and it is a challenge. Even if they're established and successful in Canada, you're almost starting all over again with your credit rating and everything when you move to the states. So, in addition to mortgages and helping with the financing, what else can you think about that would benefit Canadians, like opening bank accounts? Do you find that those are also challenging for them?
Sean Murphy:
So, I mean, with the 206-year legacy of BMO, that they are very open to the continued business helping of Canadian citizens in the US, opening up an account should be no issue.
Evelyn Ackah:
Yeah.
Sean Murphy:
I have to be careful in terms of exactly all the product services just because I'm on my little silo in mortgage banking, but I know that they're encouraging. In fact, in order to do the Gateway program, we need to have a banking relationship. So, we set up checking accounts, set up any kind of accounts, CD money market, whatever it is, that will need that in order to set up the Gateway program.
Evelyn Ackah:
Okay. Give me a sense, Sean. I come to the States, I want to buy something in California. How long generally would that process take to be vetted, to do all the things that the banks do, so that I have a better understanding of the lead time? So, if a client says, "You know what, we want to move to the states and we want to buy something in two months." Is that a realistic timeframe frame?
Sean Murphy:
I was just going to answer your question. 60 days.
Evelyn Ackah:
Oh, I didn't know that. I just guessed.
Sean Murphy:
Good guess.
Evelyn Ackah:
Thank you.
Sean Murphy:
So, we have the Canadian documents versus the US documents, and we would have that list. From my understanding, you have your T4 statement of remuneration. We call that a W2 in the US.
Evelyn Ackah:
Yes.
Sean Murphy:
Right? You have the income tax and benefit return and notice of assessment. That's our 1040 US tax return. So, we have that initial knowledge of, "Okay, you're going to need these statements to provide and we're going to need to convert them over to US dollars." But we will do all that for you.
Evelyn Ackah:
Okay, so about 60 days. I think that's very good. That's very fast, actually. And so, when you talked about the preferred mortgage rates versus what they normally Canadian would get coming down, obviously depends on the person's credit history, etc. But are you seeing that you guys stand out as a bank from maybe some of the other banks that make it harder for Canadians to get mortgages?
Sean Murphy:
I have to wonder is that there are a lot of different lenders out there and they offer a lot of different programs. I can't keep track. I've got enough numbers in my head to be able to know what everyone's offering. But I was doing a little bit of pricing beforehand, and say, if I wanted to have a Canadian citizen participate in the Gateway program and we were to look at locking in an interest rate today, and of course that's going to change tomorrow, but it's something that if you do 80% financing to $1,000,005 purchase price with $1,000,002 loan amounts, and it's going to be an owner-occupied property and I'm a Canadian citizen, we were looking at around 7% interest rates.
Evelyn Ackah:
Okay, all right.
Sean Murphy:
Okay? Without paying any points, with a good credit score. And they can always buy points to buy the rate down. They could do an adjustable rate mortgage. They have the whole wide cadre of products available to serve them.
Evelyn Ackah:
Well, this is really interesting. I mean, really happy to hear this because I hear a lot, when people come to Canada, they're starting all over again too. Americans come in, it's like they have no credit and it starts from nothing. And that is very frustrating when you've been established somewhere else. So, I think for Canadians going to the US, to know that they have the ability to have some more support so that they're not feeling like they're starting completely over. The other thing I know you do, Sean, is you work with businesses like physicians' loans and construction. Tell me about that aspect of your role at BMO.
Sean Murphy:
Bank of Montreal offers some specific loan programs that they see are good risks. They're good, that they know. The physician loan is designed for doctors, and which are MDs by the way, not PhDs.
Evelyn Ackah:
Yes, I got it.
Sean Murphy:
And then, DDS.
Evelyn Ackah:
Yes.
Sean Murphy:
Of course, your dentist.
Evelyn Ackah:
Yeah.
Sean Murphy:
Okay? So they're specific in that regards. And then what they do is, they're encouraging newer dentists, newer doctors to say, "I've gotten out of medical school, I've done all my internships. I'm ready to get started in my career, and yet I want to buy a home, get settled in the community I want to serve for the next 30 years." Right?
Evelyn Ackah:
Yeah, yeah.
Sean Murphy:
And so, this is a program that allows them, knowing, we already know ahead of time that in many cases, they've got probably a decent amount of student debt that we got to factor in. And so, we give them a lower down payment option without paying mortgage insurance, enabling them to say, "Hey, I can qualify for a good solid interest rate and getting me into the house moving forward."
Evelyn Ackah:
Okay. That's great. So, what are you seeing right now in the market? I mean, focusing on mortgages in your wheelhouse, are you seeing, with all the changes, I mean, you're not giving, I know financial advice, but just what are you seeing? Are people more hesitant? The interest rates are going up? Are people just jumping in? Where are you, where's your, just on the ground kind of feel of things.
Sean Murphy:
I like that softball, thank you. I think that what we're seeing is that the interest rate market last year with inflation just shot through the roof, 30 year highs. It just hadn't seen these numbers in a long time. And so many people who were like, "What?" Got whiplash with that-
Evelyn Ackah:
Yeah, yeah.
Sean Murphy:
... pandemic 2, 3% interest rate. 8%, what?
Evelyn Ackah:
Wow.
Sean Murphy:
So, those rates have come down since November, December. It was October is really peaked this last year, and so they've come down. And so, obviously as you can imagine, a US citizen with US credit getting a US mortgage, they're in the sixes again.
Evelyn Ackah:
Yeah.
Sean Murphy:
And so, that's pretty solid. And so, my conversation with those who I've been talking about, pre-approval, getting them prepared, ready to go, nobody's in the wait. Get in now, get pre-approved. Know what you can afford so that you can jump and get in when you see a property you like.
Evelyn Ackah:
Exactly. Yeah. You want to get ready because, especially in California, if that's where they're heading. So, you do mortgages for all 50 states? So people... Okay, because a lot of our clients want to move to Arizona, move to Texas, move to California, move to Florida. Obviously, they're looking for the heat after the -40 degrees Celsius we've been having lately.
Sean Murphy:
Oh
Evelyn Ackah:
Yeah. So, that's wonderful to know that you're across the country. Similar to immigration, it's not like you're just only do California.
Sean Murphy:
Correct.
Evelyn Ackah:
That's very good. Okay.
Sean Murphy:
Yeah. And I think one thing, Evelyn, just to add onto the point was that, the feeling is, okay, rates are coming down, inflation's getting tamed with what the Fed is doing in the US. I'm going to time the market. I'm going to be smarter than the market and I'm going to wait. And I'm going to hesitate, I'm going to tell those who were looked to hesitate that way, "You can do whatever you want, Mr. or Mrs. Borrower." But, please note that every 1% drop in interest rate, the affordability index increases 5 million more home buyers that can now afford to buy.
Evelyn Ackah:
Exactly.
Sean Murphy:
So, what do you think is going to happen here? Those people are going to jump in and they think they're going to time it just like you are.
Evelyn Ackah:
Everybody else.
Sean Murphy:
What happens to the prices of homes?
Evelyn Ackah:
Yep. They just go up. They go up.
Sean Murphy:
Go right back up.
Evelyn Ackah:
Yeah.
Sean Murphy:
So, get in now while you can. If the rate's in the six are low sevens, just because you're like, "Wait, can always refinance down the road."
Evelyn Ackah:
Yeah. We're all so used to, I mean, I remember when my parents, they bought our first house and the second house and interest rates went up to in the 80s, remember that?
Sean Murphy:
Oh, yeah.
Evelyn Ackah:
Crazy. 24 whatever percent. I mean, and then, we are so used to seeing it so low. So, I think everybody in North America especially is just kind of like, "What's happening to interest rates?" But it's like, we were so comfortable at 1%, 2%, whatever the heck it was, that wasn't realistic or that wasn't sustainable. And so, I do think it's just reasonable. We're not at the 25% level, but I feel like people need to recognize it's an investment. It's not something that you just kind of buy and flip. Hopefully it's something that you hold onto and gain that equity over time. I think that's the plan for a lot of families, right?
Sean Murphy:
In the life that you want to lead. I mean, with the memories you create and the lifestyle that you have, it's a combination of all those factors.
Evelyn Ackah:
Yeah, yeah. No, I think at home and all of that, having someone support you through that. So, in addition, Sean, if somebody wants to purchase and they want to be connected to you and they want to get through the pre-approval, do you also at BMO make recommendations for, I don't know what else they need, accountants, realtors? Do you have that network that if they didn't have, you would be able to offer?
Sean Murphy:
Absolutely. I am well involved with a business networking group, that's how you and I connected.
Evelyn Ackah:
Yeah.
Sean Murphy:
9,000 members strong throughout the United States, and they're all seasoned veterans in their respective lines of work. So, all levels of the legal field, financial, real estate, all those business experts that you need to connect with to help those different elements in your life, we have great connections to share.
Evelyn Ackah:
That's good. That makes a difference, because otherwise you come in and you're feeling like you don't know what you're doing, you're in a whole 'nother city and it's a big transition. So, I think this Gateway program sounds really, really interesting. I wonder if BMO in Canada has the equivalent for Americans. Do you know if they do?
Sean Murphy:
I've been told I cannot originate a loan in Canada.
Evelyn Ackah:
No, I know.
Sean Murphy:
So, whether the Canadian mortgage bankers do loans on the Gateway for the reciprocal, I can ask and follow up with you to share in a future update.
Evelyn Ackah:
I think that's interesting. I think it would be interesting, because I know it's hard as well for Americans coming to Canada.
Sean Murphy:
Yep.
Evelyn Ackah:
They're starting all over. They have a higher expectations of interest rates and deposits and all of that. So, it's very similar, for sure.
Sean Murphy:
Yeah.
Evelyn Ackah:
I'll be interested to see if there's some NAFTA cross border elements that we can highlight.
Sean Murphy:
I would take that as a takeaway. You know what I mean?
Evelyn Ackah:
Okay. Yeah.
Sean Murphy:
I'll follow up with you on that, Evelyn.
Evelyn Ackah:
I think that would be really good. Can I get a sense from you of what are just average, the closing costs that people would need to think about as well? Because everything adds up, right? So, I don't know, is there a percentage amount, or does it vary from which city you're in, which property you're buying?
Sean Murphy:
Yeah. I think, yes, yes and yes.
Evelyn Ackah:
Okay.
Sean Murphy:
Because every situation's unique to the town, the community, the state, the county that you're buying in. I know for a fact, I've done loans in the state of New York and they have a mortgage tax.
Evelyn Ackah:
Yes.
Sean Murphy:
And that mortgage tax can be 2% of the loan amount.
Evelyn Ackah:
Wow.
Sean Murphy:
So, just the simple fact of borrowing $1 million to buy a $1.25 million home, you're paying $20,000 in mortgage tax.
Evelyn Ackah:
Mortgage tax, okay.
Sean Murphy:
Right? Here in California, we don't have a mortgage tax. Florida has an intangible tax. So, they're different states that have different... But, so, the generic answer is that you have title, escrow, appraisal, lender fees, recording fees. Those are entities involved helping someone get a mortgage. And I'm not counting for points, I'm not counting for homeowners insurance, these things that you all take into account. If you're buying 1.5 And the loan amount is 1.2, I'm going to say this, $1.2 million, $1.5 million, you're probably looking in the 10 to $range.
Evelyn Ackah:
Yeah, that makes sense. That makes sense. I mean, you're working with professionals, you want to make sure it's being done right. That makes sense. Yeah.
Sean Murphy:
Yep, absolutely. And so, Mr. Borrower, Mrs. Borrower, you can pay points to buy down your rate. You can do different things. You're going to have to pay your homeowner's insurance upfront, you're going to have prepaid interest. That's what we do, right, and explaining all that to them, educating them so that there's no surprises.
Evelyn Ackah:
That's really, really good. So, Sean, as we get close to our wrap up, I want you to tell me exactly who are your ideal clients, referral sources, and where can they find you? We will be sharing your information when this podcast goes live, but really to be very focused on what you do, who you want, and how they can find you.
Sean Murphy:
That's super nice of you to ask, thank you very much. For me, I love working with the first time home buyers because they come in wide ranges of individuals. Young, 25, 30 years, some people, professionals that are looking to grow and have a family and develop their future life together. I love the ability to educate them. I love to be able to tell them what you need to plan for because I was there at one point, and it sure felt good to have someone walk me through that. One thing I learned is, you're smart at what you do. You know immigration law backwards and forwards, and I do mortgages backwards and forwards, right? And I am not a tech expert and I'm not a medical professional.
Yeah. And so, it's like, "Hey, I got you. I know how this works, and I want to make sure to take care of you and help you make good decisions for you and your family." So, those first time home buyers are wonderful people. And you know what? They're going to upgrade to the next home, they're going to buy an investment property, they're going to get a second home. There's a long-term relationship opportunity there, so that's why I like working with that class of buyers.
Evelyn Ackah:
Yeah.
Sean Murphy:
I'm based in all 50 states. My legacy starts in the San Francisco Bay Area, but I know people all over the country. So, that's a focus of, you know anyone in San Francisco Bay Area that wants to buy here? I know the whole area, and I can help direct you and even be a tour guide for you.
Evelyn Ackah:
I'm looking forward to that next time I come to San Francisco.
Sean Murphy:
Yep.
Evelyn Ackah:
I really appreciate this. I think you're right. I mean, you and I operate similarly. It's the relationships, and it's long-term. So, when you help that new family get their first home, of course they're going to go back to Sean because they got the service and they got the support, and that extra added value is so important. You don't want to start over with somebody that doesn't know you. And then, of course, you might be in a better financial situation that further down, to upgrade.
And so, I think it makes sense that you are the relationship guy, and I just really want to thank you for joining us today and allowing us to learn more about the Gateway program and BMO in the United States and mortgages across the country. I'm hoping that our listeners, they will get all your information, but I'm hoping that anybody that's interested to move to the states for business, for pleasure, for investment, would be open to contacting you so that you can talk to them about what you do and learn more. Thank you so much, Sean.
Sean Murphy:
This has been awesome, Evelyn. I really appreciate your time and great to meet everybody. I look forward to helping them.
Evelyn Ackah:
Thank you so much. I really appreciate it. Okay.
Sean Murphy:
Thanks.
