Maui is a bit different market from other areas. We have buyers coming from all over the world. Well priced properties tend to have multiple offers on them. Prior to even looking at properties, you should get pre-approved. The reason for this is that when you go looking at properties, you may find the one that you want on the first trip. However, it may take a day to get pre-approved. In that time frame the property could go under contract with another buyer. It is not uncommon for the well-priced properties to have 5+ offers. Don’t lose out on a property because of not having a pre-approval. The Pre-Approval ensures that you are looking in the right price range so that you don’t waste time looking at properties that are either too high or too low in price for your qualifications and what you are comfortable spending.
- Conventional (Fannie and Freddie)
- Asset Depletion
Begin to gather the documents you’ll need during the mortgage loan process. This may take a little while, so it’s best to start early.
- Pay Stubs. Current pay stubs for the most recent 30-day period.
- W-2 Forms. IRS W-2 forms for the most recent 2 years.
- Tax Returns. Personal tax returns for the two most recent years.
- P&L Statement and Balance Sheet. If you are self-employed and own more than 25% of your business, business tax returns for the most current two years, a year-to-date profit and loss statement and balance sheet.
- Bank Statements. Current bank statements for the most recent two-month period or quarter.
- Landlord Information. If you are currently renting a home, please provide the name, address and telephone number for your landlord(s) for last 12 months.
- Rental Agreements. If you own rental properties, provide current rental agreements on all rental properties and expense related information.
- Closing Statement. If you have sold a home within the last 6 months, please provide your closing statement for the property sold.
Condotel is a portmanteau of the words “condominium” and “hotel”. It describes buildings used as both a condo and a hotel, with owners keeping the rights to rent their units while they’re not actually using them.
Most often, condotel rentals are managed by an on-site rental company.
Hawaii, and Maui specifically has many “Condotel” properties. Make sure your Realtor ® understands the difference between a Condo and Condotel. It could make the difference between a successful stress free closing and a very stressful and unsuccessful closing.
Like non-warrantable condos, condotels cannot be financed through Fannie Mae or Freddie Mac and so, more often than not, condotel buyers have found themselves up a creek; ready to close but without suitable financing.
Thankfully, mortgage money is available for condotels and non-warrantables — you just have to know where to look.
Conventional mortgage loan is a type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. About 35-50% of mortgages, depending on market conditions and consumer trends, are conventional mortgages. In other words, Fannie Mae and Freddie Mac guarantee or purchase 35-50% of all mortgages. Conventional mortgages may be fixed-rate or adjustable-rate mortgages.
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. They are available on 1-4 unit properties.
What is the purpose of this program?
They provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.
What are the eligibility requirements?
The borrower must meet standard FHA credit qualifications.
The borrower is eligible for approximately 96.5% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.
Lending limits for FHA loans insured for HAWAII counties (Single Family).
KALAWAO (NON-METRO) $716,250
A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government sponsored enterprises that buy mortgages from lenders. The limit is $417,000 in most parts of the United States, but is $625,500 in the highest-cost areas and in-between in others. Hawaii’s limit is $625,500 for conforming loans so any loan above $625,500 would be considered a jumbo mortgage in Hawaii.
Portfolio loan is a loan that is serviced by the lender that issued the money. Here are the basics of the portfolio loan and how it works. In many cases, loans that are issued by a lender are packaged together with other loans and sold in the secondary market. With a portfolio loan, the lender that initially wrote the loan is going to hang onto it and keep it as part of their investment portfolio.
If a lender keeps your loan as part of their portfolio, it can benefit you overall. Instead of having to work with a lender that is going to service your loan from another location, you will be able to keep your relationship with the lender that you originally worked with. By doing this, you will be able to contact them whenever you have a problem. Your customer service experience should improve. In addition portfolio lenders can typically offer consumers greater flexibility in the loan granting process, as well as down the road, than lenders who make mortgage loans with the intention of selling them – either immediately or at some time during the term.
The USDA loan and Maui properties have the location requirements that make the Rural Housing Program ideal for this market.
- Provides 100% loan-to-value financing for existing homes or new construction based on appraised value.
- Available to low and moderate income rural households
- No requirement to be “first time” home buyer
- Less up-front cash to close requirements for this program than conventionally insured FHA loans
- Loan limits are dictated by the applicant’s income with respect to program eligibility and loan repayment ability. Previous ties to FHA loan limits have been eliminated.
Maui exclusions from the Rural Housing Program are Kahului and Wailuku. All other areas of the island qualify for this program. Since this loan aims towards people intending to occupy the property as their primary residence, Ohana’s or cottages are not allowed. However keep in mind that many condos qualify for this as well so not just single family homes.
Another point worth bringing up is that it allows for the seller to contribute towards your closing costs. This creates a possible situation where you could literally buy a home with zero money down and zero money out of pocket to close escrow! I know it might be hard to believe this is possible in today’s world of financing but it’s true.
A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA). The loan may be issued by qualified lenders.
The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities.
The VA loan allows veterans 100% financing without private mortgage insurance or a 20% second mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA; this fee may also be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI, more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.
VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae / conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.
The maximum VA loan guarantee varies by county. As of 1 January 2010, the maximum VA loan amount with no down payment is $417,000, although this amount may rise to as much as $1,094,625 in certain specified “high-cost counties”. VA also allows the seller to pay all of the veteran’s closing costs as long as the costs do not exceed 6% of the sales price of the home.
Other than a USDA loan these VA programs are the only other way to purchase property today with zero money down.