Buying Kauai land? You may want to bring your mainland lender…
Aloha,
Throughout my real estate career one of my main mantras has been “Use a local lender.” They know the lay of the land, they understand our Hawaiian terminology, basically – they know what they’re lending on. I’ve seen too many buyers go with a mainland lender who assured them they they could loan on the “Condhotel” or whatever only to have it blow up within days of closing or have the interest rate and / or points increase because the underwriter finally understood what the buyer was buying.
With the shakeup in the financial market comes a change in my recommendation to always “go local.” At our last Kauai Board of Realtors meeing, American Home Savings gave a financial update, and said they were no longer lending to mainland buyers on LAND. The reason being that of the few loans they have had go into default, the majority were land and of those land loans, the majority were mainland buyers. So there you have it. American Savings’ land loans now require 25% down up to $650K, 35% down up to $1M with full documentation (in other words, the stated income is history..) along with 6 months reserve of PITI (principle, interest, taxes and insurance) and minimum fico score of 680. No exceptions. Other lenders have implemented similar restrictions and requirements.
This does NOT apply however, to a land purchase and construction loan where 95% financing is still available for both local and mainland buyers on conforming amounts or 90% financing for Jumbo loans. On these, a fico score of 700 is required along with 6 months of cash reserves and some other conditions. The bank feels these are less risky as the buyer is purchasing the land and moving ahead to build on it, thus making a much greater committment and investment than someone just buying raw land.
There are many excellent lenders here on Island, and I’m sure most agents can recommend several to you, some who may be able to broker the loan out if needed. When you start shopping for a property, it is the wise buyer who starts with finding a good lender and understanding what the requirement and limitations of the various loan programs are. Find a lender you are comfortable with and can trust because the financial landscape is changing almost daily.
Happy Shopping!
Aloha Elaine
Elaine Schaefer (R, GRI, ABR)
Broker in Charge – Princeville Resort Office
Graduate, Realtor’s Institute
Accredited Buyer’s Representative
Top Producer 100% Club
RE/MAX Kauai
Princeville Resort Office
POB 223632
Princeville, HI 96722
cell: 808 639 2935
home fax: 1 808 440 4552
email:soldonkauai@yahoo.com
website: www.kauairealestatenow.com
blog: www.blogs.alohaliving.com/princeville-condo-sales
……you can have your own piece of paradise
ask me how!
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