Buying a Home in Hawaii
It has long been a misconception that Hawaii bars “foreigners” (meaning non-Hawaiians) from owning land. In reality, it’s been possible for people from mainland America and elsewhere to buy their own land since the end of the 19th century.
And most properties listed today have something called “fee simple” status, which means you own the land without things like leaseholds and ground rent.
Another fallacy is that, if you are not from Hawaii, your property taxes will be higher than everybody else’s. This is simply not true. Until recently, Hawaii has been able to boast some of the lowest property taxes in the country (0.35% of the home’s value).
The only thing that’s changed applies solely to “non-owner occupant” homes worth more than $1 million. And those are often vacation or investment homes — they’re not the main residences of their owners.
The new rate for those currently stands at 0.6% of the value of the property. And, if you were born in Hawaii, and you own an investment property worth more than $1 million, you too will pay the 0.6% — just as a non-Hawaii-native would.
Refinancing in Hawaii
There’s nothing special you need to know about refinancing in Hawaii. The process is similar to that in most other states.
The exception is if your property is in a leasehold. Make sure your lender knows about it and has approved this property type.
Additionally, you’re likely to be refinancing a condo in second-home or investment-property status. Make sure your lender knows this status and receive refinance quotes accordingly.
No matter what type of refinance for which you apply, other factors that will determine your rate and fees. And two of those are things over which you have direct control:
- Your credit score. The higher your score, the lower the rate you’ll be offered. So pay all your bills on time, keep credit card balances to a minimum and don’t open new credit accounts in the months leading up to your refinancing
- Your debt-to-income ratio. This is the proportion of your income that goes out on homeownership costs (not much you can do about those) and debt payments. So try to get you debt levels as low as possible. And don’t ramp them up with big purchases ahead of a big borrowing event
It’s a great idea to actively monitor your credit score. Check out many free and paid-for options online — well before you apply to refinance.