Honolulu HomeLoans

There is a lot of talk about today’s low 30 year interest rates, but what many of us have not paid attention to is how low 15 year mortgage rates are. For example, a person with good credit can qualify for a 15 year rate of 3.875% (APR 3.93%). Now, you may say that you don’t like the higher payments that come with a 15 year loan, but you should look at how much interest you will save over the life of your mortgage. For instance, for a loan of $ 400,000 that is refinanced today at 4.625% ( APR 4.604%) for 30 years the principal and interest payment would be $ 2,055.36. This means that over 30 years you would pay a total of $ 739,930.05 which includes principal and interest. For a 15 year term with an interest rate of 3.875% your principal and interest payment for the same $ 400,000 loan amount would be $ 2,933.75. Yes, that is a payment that is $ 878.39 higher than a 30 year loan, but the total payments over 15 years amount to $528,075.00, this amounts to $ 211,855.5 in interest savings compared to a 30 year loan! Another advantage of having a 15 year loan is that by paying the loan down quicker you will have more equity in your home available for you to use in the event you sell your current home and upgrade to a larger home.

President Obama signed on July 2nd, 2010 House Resolution 5623 which extends the closing deadline for the homebuyer’s tax credit program by three months to September 30. Originally, homebuyers who signed a sales contract by April 30 had until June 30 to close and qualify for the tax credit. The extention was granted due to closing delays that were created by lapses in the flood insurance program, rural housing developnment program and changes to mortgage settlement rules which had delayed closings beyond the June 30th closing deadline. Now, first time homebuyers will still be able to claim their $ 8,500 tax credit and repeat buyers their $ 6,500 tax credit as long they contracted by April 30th and close their loan by September 30th.

We have noticed a bit of a buzz these past few months from potential homebuyers who were rushing to get pre-approved for a loan so they could make the deadline to qualify for the First Time Homebuyer Tax Credit. The maximum credit for a first time homebuyer is $8000.  There is also a $6500 credit if you already own a home.  In order to qualify, the buyer had to have an accepted sales contract by April 30, 2010 and close by June 30.  So, in other words, if you made the sales contract deadline of April 30, you had 60 days to close your loan.  It appears that across the nation, 60 days was not enough time for many of these buyers to close; and Realtors and lenders appealed to the government for an extension.  On Wednesday, the Senate voted to extend the credit 3 more months but only for those buyers who have a signed contract as of the April 30 date.  The House of Representatives still has to vote before it becomes law, which may be after the June 30 date.

So the good news for those buyers who got their contracts signed by April 30, is that you may have until September 30, 2010 to close! 

Are you a buyer working another lender still trying to close a deal that has been backlogged or delayed?  Feel free to contact one of our loan officers to see if we can expedite your loan approval to a 30 day close.  And if you missed the April 30 contract deadline, the good news is that rates are at an all time low and on top of that Honolulu HomeLoans is offering a 0.250 point  discount on all new purchases, so it’s still a great time to buy!

Now is a fantastic time to take advantage of today’s historic low rates by refinancing your existing mortgage, or purchasing a home 30 year fixed rate mortgage rates are at near all time lows, and the 15 year fixed rate set a record low last week!   If you look back in time we have not seen rates this low since the 1960’s. 

If you are looking to buy a home next year, you should consider this, what if rates are 1 percent higher at that time, and what effect would that have to your mortgage payment. Let’s say that if you were to purchase a home today for $ 500,000 with a down payment of  $ 100,000. This would leave you with a loan amount of $ 400,000 and at today’s rate of 4.50% (APR 4.674%) your principal and interest payment would be $ 2,026.75.  Now if you were to wait to purchase next year and rates move up by 1%, which is very likely, the rate would be 5.50%. Based on this rate, your principal and interest payment would be $ 2,271.15. This means your monthly mortgage payment would be $ 244 less if you purchased now instead of next year! In my example I  used the same purchase price and loan amount if you were to purchase today instead of next year, but what happens if prices increase next year, which seems very likely based on the most recent Honolulu Board of Realtor housing statistics.  So my advice is to act now before mortgage rates increase!

Anders Hostelley

Executive Vice President

Honolulu HomeLoans

Excerpt from HBR’s Official Open House Guide in Honolulu Star Bulletin April 11, 2010

Since opening in the TOPA Tower in downtown Honolulu two months ago, Honolulu HomeLoans has grown to include over 50 personnel and experienced an immediate increase in lending activity, closing $13M in mortgage loans in March…

“We are working with first time homebuyers, move-up buyers, and investors taking advantage of the still record low interest rates and the opportunities available in today’s residential real estate market,” said company President and CEO Tom Zimmerman, who founded HHL together with seven other mortgage industry leaders.

“What HHL is brining to Hawaii’s lending market is a wealth of experience… our team combined has over 750 years of successful experience in the Hawaii mortgage, finance and real estate markets….Relationships are very important in this business. Over the years you build up trust and familiarity with the way people work.  The borrower benefits because we can close loans in a timely manner…”

                Zimmerman pointed out that, as a mortgage bank HHL lends its own money.  “ Being able to make our own decisions and fund our own loans amounts to a real plus in customer service.”  HHL offers conventional 15 and 30 fixed rate loans, Adjustable Rate Mortgages, FHA, VA and US Department of Agriculture Loans and will broker construction and land loans for clients. 

                The HHL Team includes an “honor role” of long-time Hawaii mortgage lenders, some of whom worked with Zimmerman when he started his career in finance at Honolulu Mortgage 20 years ago, and subsequently at Bank of Hawaii.  Together with company Chairman Ron Schmid and Gayle Ishima, he founded Hawaii HomeLoans in 2001, a company that was acquired by Central Pacific Bank in 2005 and renamed Central Pacific HomeLoans.  Zimmerman and his team managed Central Pacific HomeLoans for the past four years before leaving in August to form Honolulu HomeLoans. 

                Zimmerman said he is optimistic about the Hawaii marketplace based on the relative stability it has enjoyed through the turbulent years following the subprime crisis.

                One of the company’s new team members, HHL Executive Vice President/ Loan Origination, Anders Hostelley noted, “If you look at the most recent statistics from the Honolulu Board of Realtors, you will see that sales prices have leveled out to the point where the average sales price for a singlem family home in the month of March rose to $599,000, which is a 4.2 percent increase over the same period in 2009.  Furthermore, days on the market for both single family homes and condominiums have decreased, which are additional signs of a healthy recovery.”