Finance Your Hawaii Home Purchase

Waikiki-Beach-Hawaii

 

There are basically three ways to finance your Hawaii home. The first and most popular is obtaining a mortgage loan from a broker or lender. The second way to finance your Hawaii home is through seller financing. And the third method of buying your home is paying cash. Let’s look at each of these methods.

The most popular method for financing your Hawaii home purchase is through lender financing. You can obtain this mortgage loan directly through the lender themselves or through a mortgage broker. There are advantages and disadvantages to using each. By using a mortgage broker you will be able to gain access to numerous lenders/investors all wanting to purchase your mortgage from the broker. This usually ends up with you getting a slightly reduced APR (Annual Percentage Rate) on your loan and reduced loan costs. But only if you do your due diligence and watch out for unscrupulous brokers. After the loan goes through the broker will then sell the loan to the lender/servicer of their choosing. If you decide to shop lenders and choose a particular one, chances are you will be paying a slightly higher APR and loan fees. The advantage to going straight to a lender is that it is easier deal with the lender directly. And if you use a local lender you will get more personalized service. If you choose the bank with which you already have accounts they will sometimes discount some of their fees.

Seller financing can be an option if the seller owns the property outright (No mortgages or liens against the property). In this method of finance the seller will probably charge a higher APR but the loan fees will probably be lower. Also, you may need little to no down payment. The down side may be higher payments but if your FICO credit score is not that great it can be a great way to get into a home.

Cash sales are not as common as financing a home. The plus side is you own your home outright. But the down sides can be tying up a large sum of cash that could be used for an investment and/or income. And you may not be able to take advantage of the home owner’s exemption on your tax return. Also, you will have to provide proof of cash funds at the time of the offer or soon thereafter.

Dave Brilliant and Kona Ka’u Realty help you find a lender if you are not already working with one. Contact Dave Brilliant at (808) 366-8714 or email me dave@davebrilliant.com

By Dave Brilliant