Financing

I. Introduction
II. Trusted Lenders
III. First Time Home Buyers
IV. Second Home Buyers
V. Investors
VI. Condo Financing
VII. Single Family Residence Financing
VIII. First Time Home Buyers

Financing is a tricky proposition these days with numerous hoops to jump through and the lenders are calling all the shots.  After the lax and irresponsible actions on their part during the craziness of the 2000 to 2006 housing run up, they have let the pendulum swing far in the opposite direction making getting a loan a difficult and lengthy process.

Once you've decided to make a purchase and have further decided to use commercial financing for your purchase, it is best to begin immediately by contacting lenders to see what they have to offer.  Talking to a lender will not cost you anything and there is no obligation on your part to use that lender.  It is recommended that you get a minimum of two, preferrably three estimates from lenders.  When you do this, always request a HUD (Housing and Urban Development) Good Faith Estimate.  This is a standardized form that regardless of how the lender words certain charges or fees, we will be able to compare apples to apples and PC's to PC's.  I say we because if you are not familiar with this process and form, I'll be happy to sit down with you and go over it so you understand what is being offered.

Many lenders have left the maret place since the economy has slipped.  This is good because the one's remaining tend to be more full time professionals who are good at what they do not to say there aren't still some you should stay away from.  In my 13 years in this business, I have worked with many of the lenders still at work today.  I have had good and bad experiences and because of that I have compiled a list of Trusted Lenders with whom I have had successful transactions, lenders who are knowledgeable, professional and most importantly, available when you need them.  I suggest comparing their products even if you have a friend or aunty or cousin in the business.

Laura De Boer, Hawaii Community Federal Credit Union: Toll Free 800-514-2328, Cell 808-930-7750 or email laurad@hicommfcu.com.

Susan Gordon, Wells Fargo Home Banking: Cell 808-938-4664 or email susan.gordon@asbhawaii.com.

Joanne Stubenberg, Wells Fargo Home Mortgage: Phone 808-329-3955, Cell 808-345-2777 or email joanne.stubenberg@wellsfargo.com. 

For most First Time Homebuyers, financing for a property purchase is a two part process; first is qualifying you, the borrower.  The lender wants to know that they will get their money back.  Most conventional loans today require a good credit score, 700 or better.  The higher, the better the rates you'll get.  They want tax returns, pay stubs and Schedule C's if you're self employed.  The second part is qualifying the property which is normally done with an appraisal to determine value.

It takes from 30 to 60 days to go through the entire process.  At the last minute, the lender will want to verify that all the information you gave them in your application is still correct and that you haven't incurred any new debt in the mean time that would throw off your asset/debt ratio, like a new car for your new home.  Put off all major purchases, anything you'll be paying off over time, until after closing.  Do not cancel credit cards, just make sure that you're on time with all payments.

In most cases, a Second Home purchase will be considered under the same requirements as a primary residence purchase.  This means you'll get the lowest rates and best terms for your loan.

For Investor loans you are usually charged a higher interest rate and may be required to put down 25% or more, depending on the property.  There is usually additional documentation requested also to make sure you're a good risk.

When purchasing a Condo and relying on conventional financing, the lender will include the monthly maintenance fees on the debt side of the equation.  That's why it's often referred to as the second mortgage that doesn't go away.  There are quite a few other considerations on the lenders part for condos these days such as the percentage of full time residents in the complex.  Fewer than 50% and the lender may consider the complex an investor property which means you have to go through the investor procedure rather than the simpler procedure.  There are other concerns such as Condotels and delinquency rates so this is one type of loan that needs to be dealt with on a case by case basis.

Buying a Single Family Residence (SFR) is probably the simplest of loans since the lender knows exactly what collateral you're offering, a house and the land it sits on.  FHA loans currently require 3.5% down while other products may allow 5% or 10% down.  These products and their availability change almost daily so being in touch with a knowledgeable lender is a very good idea.

For First Time Home Buyers there is no special government financing available for first time buyers.  There are certain other benefits offered by the various lenders so be sure to tell them that you are a first time home buyer.  That doesn't mean you've never owned a home, it just means that you haven't owned one in the last three years.

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