Price Comparison with Other States
In terms of average listing price, real estate in Hawaii costs significantly higher than that of other American states. It is about fifty percent higher than that of Washington DC and New York; and, it is nearly twice that of California’s. When compared according to median price, Washington DC, the top state, is more costly than Hawaii, second ranked, by about half. As a point of reference, the median and average listing price in Hawaii is greater than $500,000 and $900,000 respectively.
A recent Hawaii census indicates that the value of housing units when compared with the national median is also significantly higher. For owner-occupied housing units, the median value for Hawaii is more than $250,000 while, in comparison, the national median is only slightly more than $100,000. Furthermore, the median asking price for these units is more than twice that of the national median at $211,400.
Mortgage Rate Comparison with National Rate
When it comes to mortgage rates, on the other hand, Hawaii’s is similar to the national rate in fixed mortgages regardless of the term (i.e. 10, 15, 20, 30, and 40 year). It starts at 4.63 percent for the ten-year fixed and moves up to 6 percent for the forty-year fixed. For certain terms, Hawaii’s rate is slightly lower currently than the national rate (i.e. 10, 15, and 40 year). For Federal Housing Authority loans, thirty-year, the rate is the same for both at 5.68 percent. Adjustable rate mortgages (ARM) in Hawaii are consistently higher than the national median. There is a difference which varies between 0.29 percent, the lowest, to 2.6 percent, the highest (1 year ARM).
The Best Place to Live in Hawaii
This year research was done into which cities in the United States were the happiest. Each city was evaluated by nearly 400,000 respondents on their community life, how the locals feel, the moods, the general health of the populace, personal finances, and the available job opportunities. It was found that Honolulu Hawaii ranked third happiest overall. This study, compiled as the Gallup-Healthways Well-Being Index, was published by USA Today. Incidentally, housing and loans in Hawaii are considerably more expensive in the case of the former and somewhat higher in general for the latter. The mortgage cost, and ultimately owning the house, in Hawaii is probably a reflection of the desirability of living there.
For those who equate desirability with educational level and the percentage of adults who live in Hawaii, 85 percent of the populace is composed of high school graduates. More than 20 percent of these high school graduates proceed to college and earn a Bachelor’s degree, of these almost half gain post graduate degrees, Master’s and Doctorate degrees.
Middle aged adults, those whose ages are between thirty and fifty-five, account for about 40 percent of the population. Young adults between twenty and twenty-nine comprise about 14 percent. Children and adolescents are 27 percent of the whole. The rest have ages above 55.
Nearly half of the real estate in Hawaii was built between the 1970s and the 1990s. As to ownership, about half are owned, almost two-fifths are rented, and about a tenth of these are vacant.
Hawaii has five major islands: Hawaii, Maui, Kalawao, Honolulu, and Kauai. The best place to live is always a matter of opinion and personal preference. However, when based on the number of people residing, it appears that the island of Honolulu, by virtue of its population density is the top pick. It is also important to note that the State is a tourist destination so population density varies depending on the season. The island with the lowest density is the big island of Hawaii.
The three best places to live in, in Honolulu, are Waikiki, Diamond Head, and Hawaii Kai. Of these three, the preeminent, and the most exclusive, is Waikiki. It is popular for its manicured and pristine beaches plus the clubs remain open up to three in the morning. The prices of living there are commensurate to its popularity and peaceful beauty.
Types of Mortgage Available in the State
Fixed Rate
A fixed rate mortgage has an interest rate that does not vary throughout the life of the loan. What is agreed upon at the start remains the same until the end of the term. This also means that interest payments do not vary and the principal stays the same for the duration.
Adjustable Rate
The mortgage type which is recalculated from year to year (or according to a schedule) is the adjustable rate mortgage. The principal changes with each recalculation based on the balance that remains to be paid. A new interest rate is also calculated which results in a parallel change in interest payment.
Short Term Fixed Loan
A third type is the short term fixed loan. From the name itself, the loan begins as a fixed rate type initially then after a set number of years, converts to an adjustable rate mortgage. This type is based on a thirty-year amortization. Those planning to refinance their loans consider this an attractive option. Some companies impose prepayment penalties, however, so this should be taken into consideration before making a decision.
Conventional
The benchmark type of loan is the conventional mortgage. This type of mortgage came about during the post Depression era of the 1930s. It shares many similarities with a fixed rate type loan.
Veteran’s Administration Mortgage
A fifth loan is one that is backed by the government itself and is available on to Veterans. This is the VA mortgage. In this type, there is no down payment needed at the start of the loan. Those who avail of it also enjoy considerably lower interest rates than the previous mortgage types described.
Types Of Foreclosure
There are two forms of foreclosure in Hawaii, the judicial foreclosure and the non-judicial foreclosure. The method that lenders in Hawaii prefer is the Judicial foreclosure method. The security instrument used primarily is the mortgage Deed of Trust. Also, Hawaii has abolished the right of redemption but deficiency judgments are allowed.
Judicial
A judicial foreclosure begins with an assessment by the Circuit Court. The amount to be paid is first determined. A judgment is then rendered. In the state, having a jury decide on the case is not necessary. The order to fore close is then given. Once the bank has obtained the Circuit Courts approval, it may then begin sale of the property the same way normal sales transactions are done.
Non-Judicial
For the non-judicial type, those done out-of-court, preliminary notices are required. The property in question is then placed on advertisement. This must be done at least once per week for three weeks. It is also imperative that publishing has been done, via newspaper, for about 14 days prior to the property’s sale. This is usually done via auction where the person with the highest bid wins the property. If the property sold more than the assessed value then the surplus is given to the owner of the mortgaged property.
The borrower is given three days to come up with the remaining amount owed to the lender plus the lawyer’s fees involved in the proceedings. Once this is up, the property goes to the person who bid the highest for it. In some instances, the lender, or a duly appointed representative, may postpone the sale by making an announcement to this effect. There are other stipulations which may be indicated in the use of Power of Sale Foreclosure Guidelines portion. If there are no such guidelines included then the procedure above is what is followed.
Hawaii is a non-recourse state. This means that in the event of foreclosure, if the money from the property’s sale does not account for the amount lost by the bank, the bank cannot go after the borrower for the remaining amount. This is on general principle. It pays to go over the loan agreement very carefully with a lawyer who specializes on this area just to be on the safe side, particularly with the fine print.
Refinancing
As long as there is no prepayment penalty stipulated on the loan agreement, refinancing is an attractive recourse. Mortgage rates fluctuate every now and then. The rate when the mortgage was taken out might be higher than the present rate. Considering the amount of time involved in the usual home loan, typically about 30 years, this will mean saving a significant amount of money that may be used for other purposes like college tuition for children who have grown. Refinancing will also allow a person to switch between the fixed rate type and the adjustable rate, whichever is more favorable when the decision is made. Cash flow can thus be improved in this manner. Shorter loans can also be substituted for the present longer one for more savings.
The process is the same as that of applying for loan. The only significant difference is the purpose of the loan. This means that there will be the usual paperwork and the credit checks that go with loan applications.
Home Equity
This term indicates the amount of money paid against the mortgage balance. A decrease in the mortgage balance means a commensurate increase in home equity. If there are second loans on the home, summing up the mortgage balance of both and subtracting the payments made, also to both, equals the home equity. This can be used when a person plans to use the home as capital for another loan. Similar to other loans, the interest rate of home equity loans varies from state to state. Keeping track of this will help a person take advantage of opportunities that present themselves along the way. It may be used for times when cash is important, such as when accidents occur.
Many people who have gone to Hawaii appreciate the allure of becoming a resident there. Owning a home, or renting, is expensive though because of the demand. One way to work around this is to get a home mortgage. Real estate and loan rates in Hawaii also fluctuate. It is not always more expensive than that of other states. This being so adds incentive to monitoring the It is important, however, to exercise good judgment when applying for a home mortgage. For flexibility, it would be ideal if a prepayment penalty clause is not part of the agreement. This will allow the borrower to have the property refinanced or use the home equity to get another loan altogether with the home as collateral. With judicious planning and the right advice, owning a home, even in an expensive locale like Hawaii, becomes possible.