Fraternity-Testvériség, 2002 (80. évfolyam, 1-4. szám)
2002-07-01 / 3. szám
Li Page 12 This is the second of a four-part series on buying residences in Hungary to assist Federation members contemplating a move to Hungary. Part Two discusses the financing environment confronting foreign purchasers. Subsequent articles will explore the legal requirements facing American Hungarians who wish to buy homes in Hungary. The real estate market in Hungary is growing rapidly according to the Hungarian Ministry of Economics. In March, the government attributed the expansion, in part to the increasing availability of home mortgages and the growing number of international lenders participating in real estate financing. Nevertheless, today it is not uncommon for a residential real estate purchase to require a substantial cash downpayment - sometimes up to half the purchase price - with the remainder due anywhere from six to 12 months later. In 2000, one consulting company estimated that approximately 80% of all home purchases take place without any loans. However, the financial landscape is changing as the government has taken a more active role in fostering this sector. The Hungarian government stated that home loans grew from 190.8 billion forints ($763.2 million) in 2000 to 329.1 billion forints ($1,316 billion) in 2001. The Ministry of Economics also noted that a program providing mortgage loans with interest support TESTVÉRISÉG Real Estate Mortgages in Hungary by Katalin Melamed for first time homebuyers and families with children were 4.3 times higher in 2001 than at the end of 2000, and the number of people granted loans quadrupled, while the amount of loans extended with supplementary interest support tripled, and the number of borrowers was 2.5 times higher. These programs are not likely to be of much value to American citizens. But the programs do suggest that the Hungarian real estate market is starting to adopt mortgage financing. However, Americans thinking about buying property in Hungary still may find that the financing environment in the country remains challenging as home mortgages have not yet been fully introduced in the Hungarian market. On the bright side for Americans wishing to buy residences in Hungary, prices are low by Western standards. However, prices are expected to rise, and Americans should be aware that some property values in Budapest and other areas in high demand may mirror some U.S. real estate prices. Nevertheless, slowly but surely, the use of mortgages is taking hold in Hungary. Földhitel és Jelzálogbank (FHB) was the first bank to offer mortgages and was established in 1997 after a lengthy legislative process. The government owns a majority of the enterprise. Some of the leading commercial banks that offer mortgages include the OTP (Országos Takarékpénztár, National Savings Bank), the Kereskedelmi és Hitelbank (Commercial and Credit Bank), and Postabank. As it is highly unlikely that U.S. mortgage companies will finance properties in Hungary, Americans are faced with either paying cash or trying to secure mortgage financing in Hungary. But finding a mortgage company in Hungary is becoming easier. As always, those individuals contemplating a home purchase in Hungary should seek legal, real estate and financial assistance from competent professionals in Hungary. There is no substitute for being there and using individuals with the expertise and experience that can be derived only from doing business in the Hungarian market. (Katalin Melamed is a real estate agent affiliated with Long and Foster in Washington, DC and Northern Virginia. She can be reached at katalin.melamed@longandfoster.com) Fraternity has published the foregoing article believing that it will be of interest to many of our readers. However, neither the editors of Fraternity nor the Hungarian Reformed Federation of America have verified the accuracy or currency of any information contained therein. Readers are strongly advised to obtain the benefit of competent legal counsel, both in the United States and in Hungary, before undertaking any of the transactions contemplated in this article. HRFA ANNUITIES • Low initial investment amounts, as low as $300 to start! • Secure Savings for Retirement • Flexibility in the amount you save and how often you save. • First Year Rate of 6.25%! Compare this to your bank’s C.D.’s, and you’ll see how great it really is!
