Getting the Best Mortgage as a First Time Home Buyer in Hawaii
With pristine beaches, beautiful weather, and a vibrant local culture, living on the shores of the Hawaiian Islands sounds like a dream come true.
Perhaps not surprisingly, Hawaii is the priciest state to own a home. According to HawaiiNewsNow, the average listing price of a four-bedroom, two-bath home in Hawaii was $904,954 in 2016.
While home values in Hawaii have increased by 5.8 percent over the past year, Zillow predicts an additional increase of 2.3 percent in 2018.
With home values skyrocketing, first time home buyers in Hawaii will face a number of financial challenges when looking for competitive mortgage rates.
As such, Hawaii first time home buyers should be fully prepared for the additional costs that come with a home in Hawaii, including options for first time home buyer programs in Hawaii.
How Much House can a First Time Home Buyer in Hawaii Afford?
For first time home buyers in Hawaii, affordability is much more complicated than simply finding out how large of a mortgage you can get approved for.
A first time home buyer in Hawaii will also have to take into consideration additional affordability factors, like the closing costs of purchasing a home, monthly budget, and debt-to-income ratio.
Visit any of the Hawaii first time home buyer calculators below to analyze factors like location, household income, down payment, and monthly debt.
Hidden Costs for First Time Home Buyers in Hawaii
Most mortgage lenders in Hawaii will disclose additional closing costs in Hawaii that come within the first stages of homeownership.
To ensure that the first few months of homeownership are as manageable as possible, first time home buyers in Hawaii should be prepared for these costs before signing off on a mortgage.
While researching your options as a first time home buyer in Hawaii, it’s helpful to consider the following “hidden costs” of mortgage rates:
- Mortgage application fees (typically 1-2 percent of the total purchase price)
- “Good faith deposit” (helps the seller know that you intend to buy)
- Down payment (20 percent of the total mortgage)
There are also closing costs in Hawaii to consider, which can include a wide range of expenses from:
- Mortgage points
- Attorney’s fees
- Inspections or surveys
- Title insurance
- Escrow deposit
- City recording fees
Although all mortgages will have their own unique price differences, Investopedia estimates that the average closing costs in Hawaii are the highest in the nation at $2,163.
First Time Home Buyer Programs in Hawaii
Aside from the mountains of paperwork and lists of financial jargon, many first time home buyers in Hawaii find that money is the biggest challenge when obtaining a Hawaii mortgage.
Thankfully, there are plenty of first time home buyer programs in Hawaii that can provide down payment assistance in Hawaii for new home buyers.
Below, you can find a few first time home buyer programs in Hawaii that a first time home buyer may be able to benefit from.
- Down Payment Assistance Loan Program (DPAL)—Allows borrowers to purchase a home with a 5 percent down payment and a second loan for down payment assistance in Hawaii
- First Time Home Buyer’s Loan Program—Offered by the Bank of Hawaii, this program offers discounted rates and reduced closing costs for first time home buyers in Hawaii
- First Time HomeBuyer Mortgage—Offered by HawaiiUSA Federal Credit Union, this program helps first time home buyers in Hawaii purchase a home with 3 percent down and mortgage insurance
- Mortgage Credit Certificate—Provides annual tax credits to Hawaii first time home buyers
Conclusion – Getting the Best Mortgage as a First Time Home Buyer in Hawaii
For many Hawaii first time home buyers, saving for a down payment and the closing costs associated with a mortgage is one of the biggest obstacles.
Home loans can become more manageable when using first time home buyer programs in Hawaii. Depending on eligibility requirements (income, location, tax bracket, etc.) you may be able to save thousands off your down payment or closing costs.
For a list of statewide programs and specific cities and counties offering down payment assistance in Hawaii, visit the U.S. Department of Housing to see if you could be eligible for financial assistance.
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