As the old saying goes March roared in like a lion for our east coast friends but if they come to Maui it will go out like a lamb. The metaphor referring to our beautiful weather here vs the cold weather currently being experienced on the mainland in some places. The Jacarandas have started to bloom Upcountry so we know spring is here.
This month we are featuring in our video an excellent overview of the beauty of Maui and our activities.
The monthly statistics are posted and we heard from Alan Van Zee for more news of low and no down payment programs.
Check out our featured listings and a featured article about the difference of renting vs buying.
At Fine Island Properties we are rooted in the culture of Aloha, our Maui community, and our professional knowledge. We are ready to serve you and accomplish your goals, with Aloha!
Gina Duncan, R (PB)
Click on the link below for current information on the benefits of buying a home vs renting a home. Let us know if you have any questions about the Maui market.
Renting vs Buying
Low & No-Down Payment Programs
If you are planning on financing a new home to live in, there is good news out there! There are many programs now available to help make that dream a reality. In our first installment we gave an overview of the zero-down 100% financing programs available. Last week we will tackled low-down payment programs. This week in our last installment, we will examine how various down payments from 5% to 15% will affect your rate and mortgage insurance payments.
For those that missed Part I, I provided an overview of both VA and USDA Rural Housing programs. Each allows for 100% financing.
In Part II, I highlighted Fannie Mae and Freddie Mac’s Home Ready and Home Possible programs, along with FHA financing. These programs are for those wishing to put a minimum of 3% down.
If you would like a copy of that week’s newsletter, please email me, and I will send it to you.
Down Payments of 5%-15%:
Federal Regulations require that any 1st mortgage that exceeds 80% of the value of the home requires mortgage insurance. Mortgage insurance is expensive. The premiums are based on risk. The single greatest component to evaluating that risk is your down payment. The more you put down, or as we like to say in finance “skin in the game”, the lower the MI premiums will be.
Simple math points out that the closer you are to the 20% down, the less the insurance company would need to fork out in case of a claim. The reduction in exposure translates to a lower premium.
For a little background, mortgage insurance, or MI, is a policy issued by an insurance company in the name of your lender. If you default, and a foreclosure occurs, the insurance company will pay a benefit to your lender – not you. That benefit is designed to reduce the debt owed to allow the lender to sell the property and recoup their investment. In theory, that insurance payment will mitigate a loss by your lender.
MI is not forever. MI automatically cancels when you reach 78% of the value of your home through your normal regular monthly payments. Your initial disclosures will show you paying MI for about 11 years. Again, this is based solely on regular monthly mortgage payments. If you improve your home to increase its value, or your home appreciates due to market conditions, you can request a cancellation of the MI by contacting your lender.
There are several different MI options available to the consumer. MI is traditionally paid monthly as a separate charge collected by your lender. But the premium for MI comes with a discount if it is paid as one lump sum at the time of issuance. One can also pay a portion of the premium at the beginning and receive a lower payment throughout the policy period. All of these options are grouped into a category called “Borrower-Paid” mortgage insurance.
Another popular option is called “Lender-Paid” mortgage insurance. Lender-Paid MI is where the lender pays the MI for you by hiking your interest rate. Unlike borrower-paid MI, there is no provision to have it cancelled. Since it is built into your rate, you continue paying it so long as you keep loan in place. While this seems like a horrible option, the benefit is substantially lower monthly payments to the borrower. And if you plan on refinancing or selling within the first few years, this option may be the best for your situation.
We will examine 3 scenarios of putting 5% down, 10% down, and 15% on the purchase of a $500,000 home as an owner-occupant single family home and the borrower has a credit score of 725. For each, I will provide the most used MI options of monthly borrower-paid and lender-paid.
It’s obvious, the more you can put down the better. But to give you one glaring fact from the chart above, is the huge difference in putting 15% down versus 5% and the impact on the MI premium. The monthly borrower-paid MI is reduced by $418.00. If that $50,000 in down payment difference were put in a savings account somewhere, in order to make $418 per month, you would need to have a rate of return of 10%.
The above is just example. Depending on your situation of credit score, occupancy, and other factors, the differences may be greater. To find out which program works best for you, contact me for an honest, confidential, hassle-free experience.
This Month's Mortgage News brought to you by:
Alan Van Zee
President | NMLS #: 297154
Hawaii Mortgage Company, Inc.
Company NMLS #: 232582
email@example.com • www.hawaiimortgage.net
Maui Real Estate Statistics
Maui February 2017 Statistics
Brief Maui Statistics Overview:
Page 4 - February's Sales Unit Volume
– Residential sales remained steady at 63 homes sold while Condominium sales increased to 113 units sold. The bump up in Condo sales echoes the change in Jan. to Feb. 2016. Land sales decreased to only 6 lots sold in February.
Page 5 - February's Median SALES prices
– The Residential median price increased to $672,575 while the Condo median price decreased to $465,000 after last month’s bump to $537,500 (highest since Feb. 2009). Land median price increased to $437,500.
Page 6 - Days on Market, Residential homes
= 105, Condos = 116 DOM, Land = 87 DOM. (General DOM Note: this is the average DOM for the properties that SOLD. If predominantly OLD inventory sells, it will move this indicator upward, and vice versa. RAM's Days on Market are calculated from List Date to Closing Date [not contract date], including approximately 60 days of escrow time.)
Pages 10 - 14 – This month’s “Year to Date Sales"
numbers compare only two months, January-
February 2017 to January-February 2016. Shorter timeframe (monthly) views do not necessarily reflect the longer timeframe trends.
For a more comprehensive view, see 2016's Year-End (Dec. 2016) figures available at:
YTD - Residential unit sales
declined somewhat (129 homes sold / -13 units / -9% change YTD), average sold price = $1,028,387 (+24% change YTD), median price = $655,000 (+9% change YTD) and total dollar volume sold = $132,661,877 (+13%YTD).
YTD - Condo unit sales
increased (210 units sold / +23 units sold/ +12% change YTD), average sold price = $689,876 (+18% change YTD), median price = $481,863 (+20%YTD). Total Condo dollar volume sold = $144,874,053 (+32% change YTD).
YTD - Land
– NOTE: Land Lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators. The number of Land lot sales decreased (19 lots / -6 lots sold / -24% YTD change), average sold price = $409,305 (-34%), median price = $330,000 (-36% change), Total dollar volume = $7,776,800 (-50% YTD).
Total sales for immediate past 12 months: Residential = 1,064 (with 10.1% being REO or Short Sale),
Condo = 1,334 (4.7% REO or SS), Land = 155 (2.6% REO or SS).
NOTE: 38.2% of these Sales in the last 12 months have been CASH transactions.
for full report.