The 2022 conforming limits for conventional mortgages were announced today by the Federal Housing Finance Agency (FHFA). Hawaii falls in a high-cost area and has a base loan limit that rose to nearly $1 million from the current $822,375.

2022 High-Cost Area Loan Limits – Hawaii Properties:  
– One-unit property: $970,800
– Two-unit property: $1,243,050
– Three-unit property: $1,502,475
– Four-unit property: $1,867,275

These 2022 higher loan limits for Hawaii and other high-cost areas are set at 150% of the national conforming loan limit, which starts at $647,200. Loan limits are tied to median home prices and 2021 featured strong sales and rising prices. In fact, the average sales price topped $1 million for the first time in Hawaii history. It occurred in the month of August 2021, when the median price of a single-family home on Oahu reached $1,050,000.

Higher loan limits allow borrowers to use conventional loans to make a purchase or refinance an existing loan without the need for a jumbo loan. Jumbo loans (non-conforming loans) have higher interest rates, increased costs, a larger down payment, and have more stringent credit and overall qualification requirements.

2022 conforming loan limits are available by clicking here.

Find out whether you qualify for these higher conforming loan amounts. Apply now or contact us for a no-cost consultation. 

ECONOMY & MORTGAGES: Will Rates Stay Near Historical Lows?

Inflation worries, strange employment trends, energy price increases, battles over mask mandates, and supply chain problems dominate the economic headlines. Housing, however, operates in its own world, and low inventory leading to higher prices continues to be the headline story.

While some of this can be blamed on the pandemic (people sitting tight) and on problems with new construction (a lack of both workers and materials), the broader uptick in prices has been years in the making. Growing populations are intersecting with decades of under-construction, and the resulting price impact is textbook economics.

This hits first-time buyers hardest. “With inventory at only 2.4 months’ supply, and median home prices increasing nationally at 13%, it was not surprising to see the first-time homebuyer share of the market drop again to 28% (from 31% last year),” said Mike Fratantoni, SVP and Chief Economist for the Mortgage Bankers Association (MBA).

But Lawrence Yun of the National Association of Realtors expects more supply soon, stating “As mortgage forbearance programs end, and as homebuilders ramp up production, we are likely to see more homes on the market as soon as 2022.”

Where are mortgage rates headed? Rates are technically up from historical lows set early in 2021, but only barely (see table), and still in the very low 3% range or even less. That’s still amazingly low. But where to next?

The bond markets are giving us some clues. The 10-year Treasury rate, which tends to track with mortgage rates, is pointing up since our last issue, though a bit volatile now. Bond traders are also following two key Federal Reserve moves closely:

• This month, the Fed is starting to reduce its purchases of mortgage-backed securities (MBS). This is expected to raise home loan rates as the biggest MBS buyer leaves the market.

• It’s also signaling a far-off raising of short-term rates, citing a concern about acting too soon and stifling economic recovery. But, they are starting to hedge about inflation, indicating they may be reconsidering their timing!

That means higher mortgage rates are likely ahead. While this should slow the rate of home price increases, nobody likes to leave historically low mortgage rates on the table. If you’re considering a purchase, we may be entering a period where home prices could begin to level off (but probably not drop), and where rates are still in historically-low ranges. If a purchase or refinance is in your future, this would be an ideal time to talk, so we can get you positioned for success!

Copyright © 2021 Myers Capital Hawaii

Get the latest mortgage industry news. Click here.

– Economy and Mortgages: Rates Poised to Rise. Will They Stay Near Historic Lows?
– Early Action on Higher Conforming Loan Limits for 2022. What this means for borrowers.  
– Could an Appraisal Gap Threaten Your Home Purchase? Find out how to deal with this issue.
– Financing a Home Together Before Marriage? 5 Things to Consider First.
– Pandemic Leads to Renewed Interest in Renovation. How to finance your project?

Copyright © 2021 Myers Capital Hawaii

Myers Capital Hawaii (MCH) is holding a food drive throughout the month of November to collect non-perishable food to help Hawaii’s needy families. The company has partnered with the Hawaii Foodbank to host an onsite and virtual food drive.

Did you know that 1 in 4 children are struggling with hunger in Hawaii, according to the Hawaii Foodbank? The COVID-19 pandemic has also increased food insecurity (the inability to provide sufficient food to all household members) in Hawaii by a whopping 50%. This food drive is an opportunity to help and give back to Hawaii communities in which we do business and call home.

Our goal is to collect a combined total of $5,000 in monetary and food donations. (Each non-perishable food can/item will be counted as $2 towards this goal.) The company will match the first $300 in donations.

HOW TO DONATE?
It’s easy to participate. Donations are accepted through November 30, 2021:

Online – Monetary Donations
– Visit the MCH-Hawaii Foodbank site or click the link below:

-Text VFD167 to 71777
-Scan the QR code:

Cash or Checks
Checks: Make checks payable to “Hawaii Foodbank” and add “Myers Capital Hawaii” to the memo section.
Drop off your check at either 1) Myers Capital Hawaii, 841 Bishop Street, Suite 2100; or 2) Hawaii Foodbank, 2611 Kilihau Street.

Cash: Drop off at the Hawaii Foodbank and mention “Myers Capital Hawaii Food Drive.”

In-Person
Visit our office at 841 Bishop Street, Suite 2100. Hours: Weekdays, 8:30 a.m. to 5:30 p.m.
Non-perishable food items and checks payable to the “Hawaii Foodbank” are accepted.

Mahalo for your participation and support of the Hawaii Foodbank and our island families. Myers Capital Hawaii wishes you and your families a safe, happy holiday season. 

Should you keep a mortgage in retirement? The traditional answer has always been “pay it off and retire debt-free!” In 2021, though, the real advice is “it depends, and you have to do the math!”

If your home equity is most of your retirement fund, and you can’t afford your current mortgage payments, you may have a few options:
• If your mortgage rate is above 3.5%, a refinance could result in lower payments that you can afford, and allow you to stay in the home.

• You could consider a reverse mortgage loan, which allows you to stay in the home and receive monthly cash payments or use it as a line of credit. Repayment is not due until the home is sold, the last borrower passes away or permanently leaves the home. The two most popular are the HECM loan (Home Equity Conversion Mortgage, insured by the FHA) and, for high-value homes, jumbo or proprietary reverse mortgages.

• Alternately, you could sell the property, downsizing to a home and mortgage you can afford, or simply sell and live off the remaining equity (as a renter). If your home equity is most of your retirement fund, and payments are relatively small (or none), you could do a cash-out financing and tap into the equity to supplement your budget (which would then include a larger mortgage payment, of course).

If you have retirement funds in addition to home equity, you may have more options:
• Refinance to today’s low rates (especially if your current rate is 3.5% to 4% or higher), giving you a lower payment each month.
• Downsize. Selling unlocks the equity, and you can use some to buy a new, smaller home.

Seniors With Mortgages Now Quite Common
While living debt-free is appealing, in our historically-low interest rate environment, it may make sense to keep the mortgage or take out a new loan to downsize rather than retire debt-free—especially if you can find yields on your investments which exceed your mortgage rate.

And yes, retirees can get home loans! Withdrawals from retirement accounts, pension payments and Social Security all are income that could help you qualify.

It is better to make plans before you retire, and there’s no time like the present.

Contact us for a no-obligation mortgage planning session to get information on options that best fit with your retirement goals.

Copyright © 2021 Myers Capital Hawaii

Get the latest mortgage industry news. Click here.

– Mortgage Outlook in a Long COVID Economy. What’s next?
– The Power of Pre-Approval. Why it’s important in a sellers market?
– Ins and Outs of Second Home Financing.
– Should You Retain or Pay Off Your Mortgage in Retirement?
– Options for those Exiting Mortgage Forbearance.  

Copyright © 2021 Myers Capital Hawaii

For clients seeking to buy larger homes, and even for those hoping to buy a modest home in expensive markets, we have good news. Jumbo loans have returned as a viable option.

If you need a mortgage larger than conventional loan limits ($822,375 in Hawaii, 2021) chances are now good we can get you the financing you need without paying a whole lot more in rate compared to a conventional loan.

Jumbos for High-Credit Borrowers Offer Attractive Rates
Lenders see the end of the pandemic tunnel, and their core audience for Jumbo loans actually came through the crisis in reasonable shape. These prospective borrowers stayed employed and had fewer expenses than normal. This allowed many to build assets. Now more are ready to buy. As such, the marketplace for these larger loans has grown.

A persistent myth about Jumbo loans is that they are pricey. Not so. A borrower with good credit and a 20% down payment can currently find Jumbo 30-year loan rates only 10-20 basis points (0.1%-0.2%) higher than conforming 30-year fixed rates. That’s a relatively small risk premium. Because the marketplace has grown, there’s a lot of competition between lenders offering Jumbo loans (to a relatively smaller segment of the total housing market), so rates tend to stay competitive.

Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Banker’s Association, said, “Jumbo availability is increasing again as the economy regains its footing and coincides with the strong demand for homebuying and accelerated home price growth in many markets.”

When do you need a Jumbo loan?
They are ideal for larger properties, or even typical homes in higher-cost areas, where a conventional loan cannot cover 80% of the purchase price.

Four Main Hurdles for Qualifying for Jumbo Loans
• Higher credit and more conservative debt-to- income ratios are usually required
• More substantial reserves are usually required (6-12 months of typical expenses)
• It’s a larger loan, with larger payments, so you’ll need sufficient income
• Down payments are usually 10-20% with no low-down payment programs

Many homes have moved up in price, as we all know too well. If the home you’re hoping to purchase has bumped up into Jumbo territory, you’re in luck with the healthy return of these programs into the market — their rates are surprisingly good.

Contact us for a consultation today at 808-566-6611. 

Get the latest mortgage industry news. Click here.

– Low Rates + Tight Inventory – How high can home prices climb?
– 5 Key VA Loan Advantages
– Jumbo Loans are Back BIG – Down payments from just 10%
– Outbid on a new home? Consider a renovation project loan.
– When Sellers Become Buyers – How to handle low purchase inventory when selling  

Copyright © 2021 Myers Capital Hawaii

Low housing inventory means homeowners are flooded with multiple offers. With the VA Loan, though, veterans and active duty servicemembers have benefits that can give you an edge. One myth about VA loans is that the appraisal and closing process is tougher, but it’s not really true. The entire VA loan timetable is generally on par with conventional loans, and can be done in as little as 30 days, making it similar to conventional fast-close programs.

The appraisal process takes about the same amount of time as a regular appraisal. The main difference is that fixer-uppers are not allowed – the home must be in safe, sound, and sanitary condition. It helps to choose a REALTOR® who has solid experience helping military clients, as they’ll know which homes for sale today to avoid. We work with several, so ask us for a referral!

You may have heard that VA loans have higher credit standards. Again, not true. The bottom credit range for most VA lenders is actually much more lenient than that of conventional loans. If you’ve had a bankruptcy or foreclosure in your past, the VA loan is actually much more forgiving in that the waiting period is shorter before you can get a new loan – only 2 years post-foreclosure or Chapter 7 bankruptcy (vs 3 and 7 years for conventional loans) and as little as 12 months for a Chapter 13 bankruptcy. Talk to us if this is in your history.

Perhaps the most well-known benefit of the VA loan is the 0% down payment requirement. This lets you preserve cash. Having cash gives you options, which gives you a leg up on other buyers bidding on a home you want. In fact, and to bust another myth, you can even use VA purchase loans on foreclosed and short-sale properties – – and with no money down, this gives you a huge edge over other buyers who have to come up with 20% down to satisfy conventional lenders. As long as the property is (you guessed it) safe, sound, and sanitary.

VA loans also include the VA funding fee – a one-time payment that may range from 1.4% to 3.6% for a purchase or construction loan. A little-known fact is that this fee can be paid up front or rolled into the loan amount, and if you have available cash to use as a down payment, you can reduce it significantly by putting either 5% or 10% down. There are also exemptions to the VA funding fee (for veterans with a service-related disability, or those who have received the Purple Heart).

Another myth is that servicemembers deployed overseas aren’t able to buy a home remotely or meet the occupancy requirement. Military members stationed overseas can use a Power of Attorney (POA) to appoint a spouse or someone else to handle the VA loan transaction, including signing! A spouse can meet the occupancy rule (moving in within 60 days), or you can get an extension of up to 12 months to occupy the home. There are a few details, so contact us for more info if this is your situation.

Remember, loan limits were eliminated for most VA loan borrowers last year, letting you bid on just about any house you can qualify for!

The VA loan advantage can be beneficial in today’s competitive market. If you’re a veteran or active servicemember, we can help you with the right strategy.

Free VA Loan Consultation

To find out more or start the process, call us at 808-566-6611.

Copyright © 2021 Myers Capital Hawaii 

One of the main benefits of homeownership is the ability to grow your home’s equity and utilize it for any of your financial needs. Equity is the difference between a home’s value and outstanding mortgage balance. Rising home prices in Hawaii are contributing to an increase in home equity. With low interest rates and higher equity levels, it’s an opportune time for homeowners to consider a home equity loan.

Similar to a regular mortgage, home equity loans usually have a fixed interest rate and term, keeping monthly payments predictable over a set number of years, versus a variable-rate Home Equity Line of Credit (HELOC). Borrowers receive a lump sum of cash at closing that they can use to cover big-ticket items including home renovations, repairs, or even to help purchase additional real estate.

“With rates for home equity loans in the sub-2 percent range, now is the perfect time to address present or future needs,” says Reed Myers, Principal of Myers Capital Hawaii, an award-winning residential and commercial mortgage company located in downtown Honolulu. “Equity is essentially what your home is worth minus what you owe. It’s like a savings account that grows as your existing mortgage balance goes down and your home value rises. However, you can’t touch it unless you sell your home or utilize a home equity program. For many, they have hundreds of thousands of dollars in untapped equity.”

Borrowers mainly take out a home equity loan to cover larger home-related expenses like remodeling a kitchen or bathroom, building a new deck or swimming pool, or fixing a leaking roof. These upgrades can increase the value and livability of a home. Another benefit is the loan interest used to improve the home may be deductible (consult with your tax advisor for details). Loan funds can also be used to pay college tuition, medical expenses, and even a family vacation or new car.

Homeowners who plan on retiring in the next ten to 15 years may want to consider a home equity loan. The cash from a home equity loan could open up vast opportunities, from investing in other real estate and construction projects, to business opportunities, debt consolidation, and even elderly care.

“Borrow while you are in your peak earning years,” Myers adds. “Once you retire and switch to a fixed income, you may not be able to qualify for the loan you really need. Furthermore, interest rates are trending upward and will likely accelerate as the economy improves.”

The fixed-rate aspect of a home equity loan offers a sense of comfort and consistency versus a HELOC, which allows you to draw from and make monthly payments. “Since you’re borrowing tens of thousands of dollars, you don’t want to expose yourself to a variable HELOC program where rates can adjust up to 19%,” Myers advises. “You could easily see your monthly payment increase, putting a strain on your monthly budget.”  

Since 1998, Myers Capital Hawaii takes an all-encompassing approach to solving the mortgage needs of its clients.   Whether you are a first-time homebuyer, seasoned real estate investor, or business owner who needs capital, Myers Capital will work with you to find the right loan program to help you achieve your financial goals.

Reach out to us for a no-cost loan consultation and rate quote.

Article published in the Business section of the Star Advertiser, Tuesday, March 23, 2021. Click here to view article.