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American Savings Bank Q-and-A: Mortgage Rates | GOBankingRates

Island destinations are often a favorite for people who are looking to move to an area with a warmer climate or purchase a property near the beach. Even local residents looking to refinance or make their first home purchase might want to get a better sense of current mortgage rates and mortgage options.

With mortgage rates still at attractive lows across the nation, we wanted to see what advice local banks and credit unions have to offer. We talked with American Savings Bank to find out what tools and advice the bank can give potential Honolulu homeowners.

GOBankingRates: How do Honolulu mortgage rates compare to the rest of the state?

American Savings Bank: Mortgage interest rates are the same for all cities within Hawaii, although some underwriting guidelines or available programs may vary. Area-specific programs may offer different pricing or have different down payment requirements.

GBR: What is the best mortgage option for Honolulu residents?

ASB: There is no single mortgage option that will be the best choice for every borrower. For that reason, American Home Loans, a division of American Savings Bank, offers a wide variety of mortgage loan options. This enables our loan officers to work with our borrowers in order to identify what will work best for their specific needs.

GBR: How can home loan applicants ensure they are offered the lowest possible mortgage rate?

ASB: In order to ensure that borrowers are in the best position to qualify for the best possible rate, it is important that applicants manage their finances with care prior to applying. The borrower’s credit score and the amount of down payment are two major components in determining loan pricing. Essentially, the better the credit score and down payment, the better the pricing.

With that said, there are options for applicants who have had issues with their credit or may not have been able to save for a substantial down payment.  Finally, in the event that an applicant’s situation does not allow financing, we can help coach them in an effort to get them mortgage ready as soon as possible.

GBR: How much should borrowers expect to put toward their mortgage down payment?

ASB: While 20 percent has long been considered a best-case figure for down payment, there are several loan options offering less than 20 percent down. Options as low as 3 percent down are available, and in certain cases, mortgage programs may be available with no down payment required. Conversely, having a higher down payment broadens the loan options and improves pricing.

GBR: What are the benefits of a fixed-rate mortgage versus an adjustable rate?

ASB: The primary benefit of a fixed-rate mortgage is the stability. The interest rate, and therefore monthly mortgage payment, will remain the same throughout the life of the loan. That consistency protects the borrower from possible increases in a rising interest rate market.

An adjustable-rate mortgage may have a lower start rate, but the applicant should carefully consider the interest caps as they should expect their rate to climb after the initial fixed period.  Typically, ARMs may be a viable option for those applicants who anticipate that they will not keep the loan beyond its initial fixed period.

GBR: Is it better for homeowners to finance their property over a shorter or longer period of time?

ASB: The ideal term for a mortgage loan will vary based on the applicant’s needs. Our loan officers will work with the applicant to identify the best balance between the overall interest paid and the monthly payment.

GBR: How can homeowners determine what size home loan they can truly afford?

ASB: Home prices vary by not only home size, but also by quality of construction, location, etc.  The best way to determine a

borrower’s buying power is by working with a loan officer to complete a preapproval. The loan officer can educate the borrower on the variety of loan options available to help determine a payment that the buyer not only qualifies for, but is comfortable with.

GBR: What can homeowners do to reduce the mortgage rate on their existing loan?

ASB: The most common solution is refinancing their mortgage to one with a lower rate. The borrower should check with their current lender to see what options are available. In rare instances, a borrower may have the ability to proceed with an interest rate reduction modification. This option typically costs less but will usually have other special restrictions and obligations as compared to a refinance.

GBR: Is there a limit to the number of times homeowners can refinance their mortgages?

ASB: There is no limit, but the borrower should carefully consider the transaction costs and length of the new loan involved to determine if refinancing would be beneficial.

GBR: How does American Savings Bank set its mortgage rates?

ASB: Mortgage rates are primarily determined by the secondary market where mortgages are bought and sold by institutions such as Fannie Mae and Freddie Mac. Mortgage rates are also influenced to a certain extent by competitive factors in the local market.

GBR: Are home values in Honolulu rising or falling, and how is that affecting mortgage rates?

ASB: In Honolulu, home values generally appear to be on the rise. Although the mortgage rates are not directly tied to home values, the economic environment that warrants a rise in property values will often be the same sort of environment that prompts mortgage interest rate increases.

GBR: Are Honolulu mortgage rates currently trending upward or remaining at historic lows?

ASB: After reaching historic lows during the summer of 2012, mortgage rates have slightly increased, but are still at relatively attractive levels.

GBR: Are there home financing options for a borrower with poor credit?

ASB: The options available to a borrower with poor credit will usually depend on what has caused the poor credit in the first place.  The credit score is only one small piece of a borrower’s overall credit profile.  For example, one borrower might have been late on several credit cards because they didn’t properly plan for them during a recent vacation.

Another borrower may have declared bankruptcy in the past and is now current on all their payments but still recovering from that bankruptcy. It is possible for both borrowers to have the same credit score, but the timing and severity of what caused their poor credit will mean the options available to one borrower may not be available to the other. The best thing to do is speak with a mortgage professional to see what might be available for their specific situation.

GBR: What is the housing market like in Hawaii today?

ASB: Depending on the area, it is currently a seller’s market due to a lack of inventory. Sellers may have multiple offers above asking price including cash offers and may choose the strongest buyer.  At the start of the home-buying process, buyers should work with a loan officer to complete a preapproval to be prepared when the right house becomes available.

GBR: What is the housing market like for luxury homes?

ASB: Sales of homes for $1 million or higher increased 30 percent during Q1 2014 according to a report by Coldwell Banker Pacific Properties released in April 2014. The median price was $1.4 million with 80 percent of homes between $1 and $2 million being purchased by local residents.  American Home Loans, a division of American Savings Bank offers jumbo loans for qualified buyers.

Category: American mortgage

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