The annual percentage rate (APR) estimates the total interest rate you will pay on your mortgage, including any additional lender fees.
In your mortgage statement, you will see two interest rates, and the APR is always the one with the higher percentage. It accounts for all charges that come with the loan, showing the true cost of a mortgage.
There are two types of Annual Percentage Rates, fixed and variable. In the case of a fixed APR, the rate will be the same over the mortgage term. In the case of variable APR, it will change according to the changes in Treasury or WSJ prime rate index. Some credit card issuers may change the fixed APR rate from time to time but not without notifying the user 30 to 45 days prior.
Both APR types include the interest rate, discount points, and various charges like the closing costs, private mortgage insurance (PMI), to name a few. However, they don’t include expenses associated with buying a home, such as a title search, title insurance, appraisal, transfer taxes, and more.
To acquire a good mortgage rate, you must clearly understand your interest rates and APR fees. If you take a 15-year loan, you need to pay the interest every month, but the APR has to be paid at the closing. Some institutions offer 0% APR if you can pay off the loan within a certain period.
When shopping for mortgages, compare APR rates offered by various lenders to find the best deal. Stay away from the lenders that warrant an unreasonably high APR for the same interest rate. However, don’t get too focused on APR only because you may end up paying more by ignoring a lower interest rate for the sake of a low APR.
Having lived in Paris for the past few years, our client was rejected by two large U.S. banks for foreign earned income regardless of whether her credit score was 812. She had excellent credit, high income, and a sizeable down payment, yet the bank couldn’t see beyond her income being earned outside of the U.S. and not having a W2.
How We Helped
Our only focus is foreign nationals and U.S. Expats. We know exactly what banks, lenders, and finance companies need in order to view her situation just as if she was living and working in the U.S. The loan was closed in 37 days with ease.
Experienced real estate developer purchasing a piece of land for the construction of a 12 unit Multi-Family Complex.
How We Helped
As a Foreign National, the developer has used personal cash to finance prior builds, due to the struggle of getting construction financing as a non-US citizen.
We were able to secure a purchase loan for the piece of land that will roll into a vertical construction loan, once permitting is complete. At 50% LTV for the land purchase, and 65% LTC construction loan once the project is shovel ready, the borrower would happily be able to retain more of their personal funds.
Hawaii’s property appreciation is one of the main reasons the Aloha state brings in many real estate investors, overseas and local. There is no shortage of tourists looking to rent a property, and long-term rental yields are some of the best in the U.S. For U.S. expats and Foreign Nationals looking to invest in Hawaii, buying an investment property on one of the major islands is generally a safe and very rewarding investment. Is it time to invest in your dream Hawaiian vacation home?
Last week, we compared real estate prices on the East Coast and their profitability. This week, we venture into The Aloha State and bring you property prices and average rental income between four popular investment areas in Hawaii – Oahu, Maui, Big Island, and Kauai.
Owning a piece of paradise is a dream for most people that visit Hawaii on holiday. Many real estate investors utilize their property in Hawaii as short-term vacation rentals. Although some locations on the islands may be restrictions on the minimum stay a property investor is allowed to advertise, there is surely never a lack of demand. Whether it’s February, July, or October, Hawaii sees vacationers at any season. It’s the perfect temperature, ample sunshine, and some of the best beaches in the world that play an important part in investors being able to rent out all year round. It’s the ultimate “home away from home.” Prefer a more stable long-term tenant? Not a problem. The rental prices in Hawaii are some of the highest in the nation giving fantastic yields with long-term, stable tenancies.
Oahu
According to data from the Honolulu Board of Realtors, Oahu median sales prices have constantly increased yearly since 1985. Oahu has an active and competitive real estate market with its low inventory, combined with its high demand, making it an ideal opportunity to consider investing in Oahu property. From here on, prices and demand are likely to only go one way – up!
Location:Waikele, Oahu
Avg Purchase Price
USD 1,065,640 (2000 sqft)
USD 649,500 (830 sqft)
Avg Rental Income
USD 4,580
USD 3,640
Price Per Sqft
USD 530
USD 900
Location: Waikiki, Oahu
Avg Purchase Price
USD 2,640,000 (2000 sqft)
USD 432,500 (830 sqft)
Avg Rental Income
USD 15,280
USD 4,755
Price Per Sqft
USD 1,318
USD 840
Maui
Among the 8 major islands in the Aloha State, Maui is perhaps the most famous place to visit. Due to its popularity for surfing, amazing restaurants, popular white-sand beaches, and wonderful landscapes, sightseers from around the globe just can’t get enough of Maui. According to the Hawaii Tourism Authority, millions of tourists worldwide travel to Maui every year, with a record number of 3,071,596 vacationers in 2019. These are not just the only people Maui attracts; Real estate investors find Maui’s rental yield, purchase price, and property appreciation extremely alluring.
Location:Kihei, Maui
Avg Purchase Price
USD 2,532,040 (2000 sqft)
USD 772,000 (830 sqft)
Avg Rental Income
USD 12,425
USD 6,995
Price Per Sqft
USD 1,266
USD 980
Location: Wailea, Maui
Avg Purchase Price
USD 4,540,000 (2000 sqft)
USD 847,250 (830 sqft)
Avg Rental Income
USD 22,440
USD 7,030
Price Per Sqft
USD 2,270
USD 3,450
Kauai
Based on WSJ, this Hawaiian island has become a major destination for primary and secondary homeowners during the coronavirus pandemic. Ranked 6th in the list of places to buy a seaside property, Kauai’s real estate demand is steady and sure. Because of Kauai’s laws, only one out of every odd property can be utilized as a vacation rental creating properties that can be used as a vacation rental significantly more valuable and highly sought after. Properties that can be classified as vacation rentals can be categorized as one of two categories:
1. They are situated in A VDA (Visitor Destination Area) like Princeville and Poipu
2. They have a TVR (excursion permit). The region of Kauai isn’t giving out vacation licenses, so a property either has one or it doesn’t.
Location: Kauai
Avg Purchase Price
USD 1,060,800 (2000 sqft)
USD 444,750 (830 sqft)
Avg Rental Income
USD 9,525
USD 3,410
Price Per Sqft
USD 530
USD 580
Location: Princeville, Kauai
Avg Purchase Price
USD 1,765,980 (2000 sqft)
USD 873,250 (830 sqft)
Avg Rental Income
USD 10,560
USD 4,558
Price Per Sqft
USD 880
USD 690
The Island of Hawaii (Big Island)
Hilo
Positioned as a property investment opportunity zone, the Hilo area is home to lavish wilderness, dazzling waterfalls, and vast green farmlands that continue into Kohala mountains. A fantastic scene of calderas, magma streams, and endemic Ohia trees can be viewed from the Hawaii Volcanoes National Park. Hilo’s location makes it ideal for investors to purchase an investment home and receive passive income.
Location: Hilo, The Big Island
Avg Purchase Price
USD 611,550 (2000 sqft)
USD 453,250 (830 sqft)
Avg Rental Income
USD 4,000
USD 3,650
Price Per Sqft
USD 305
USD 630
Kailua-Kona
Kailua-Kona Known for its reasonable real estate prices and amazing value appreciation, the Big Island of Hawaii is most certainly drawing investors from around the globe. Big Island is known for its elite luxury resorts attracting a lot of High-Net-Worth vacationers. Like Hilo, it is also ranked as an opportunity zone for real estate, making it a very profitable and tax-efficient investment.
Location: Kailua-Kona, The Big Island
Avg Purchase Price
USD 1,119,210 (2000 sqft)
USD 698,000 (830 sqft)
Avg Rental Income
USD 5,016
USD 3,957
Price Per Sqft
USD 560
USD 640
Whether it is to have a pure investment property or a second home to relax and get away from, Hawaii is an opportunity investment that many dream about, but few achieve. When you invest in Hawaii real estate, you get peace of mind knowing that it is one of the most stable real estate markets in the U.S. Sit back, relax, have a Mai Tai, and enjoy investing and earning passive income while the property appreciations roll in like the wave. Ready to find your place in paradise?
As a company, America Mortgages’ ONLY focus is providing market-rate mortgages financing for U.S. Expats and Foreign Nationals. 100% of our clients are clients just like you. Get in touch with us at America Mortgages to understand more about how a mortgage can get you that dream home in Hawaii. [email protected].
The debt-to-income (DTI) ratio equals your total fixed monthly debts divided by your total monthly gross income.
DTI is essential for mortgage lenders to determine the applicant’s financial capacity of paying off the borrowed money in time. Several studies suggest that borrowers with a high DTI ratio are likely to struggle more in making the monthly installments. In this case, the breakeven point is 43, which means this is the highest ratio that a lender will still approve for a mortgage. However, some lenders may consider up to 50% DTI too.
All mortgage lenders check the front-end and back-end ratios to determine the DTI. The front-end ratio covers the house-related debts, including home loans, homeowners’ insurance, property taxes, and other expenses. On the other hand, the back-end ratio mostly includes the bills and debts on your credit cards.
The ideal front-end and back-end ratios should be lower than 28% and 36%, respectively. However, a loan approval does not solely depend on this ratio. Mortgage lenders will also take your credit score, percentage of down payment, assets, and a few other things into consideration. If these figures turn out well, you can get a loan with a slightly higher DTI.
Regular household expenses will not be considered as debts. Some other big expenses that will be exempted are healthcare costs, child support, and insurance premiums.
America Mortgages is a Super Broker with an emphasis on the U.S. mortgage market. We specialize in Residential, Commercial, Construction, and Bridge financing for Non-U.S. Citizen, U.S. Expats, Family Offices, and Institutions. With the ability to lend in all 50 U.S. States (for most programs) and Internationally, America Mortgages is the “go-to” source for global Real Estate financing.
America Mortgages has direct relationships with U.S. banks, Asia regional banks, private mortgage lenders, and global funds to directly offer market-rate loan programs to the borrower in Asia or abroad.
The Power of YES! Over 11 languages/dialects spoken, cultural understanding, regional representation, and the ability to open an application and close the mortgage in most locations without leaving your home country.
A tax imposed on a real estate property by the government is called property tax. The local government supervises the regulation and collection of such taxes within its jurisdictions.
● Some of the taxable properties are: ● Land (with or without constructions) ● Buildings ● Vehicles, RVs, and boats (in some states)
The local government sets up the property taxes based on either the market or appraised value of the properties. The assessed value is always lower than the current market price.
The property tax rates fluctuate as per the change in property value over time. The location of the property also impacts it. You pay more taxes if your property is situated in a prime location or a prestigious neighborhood.
Many taxing authorities use a “millage rate” instead of a percentage of the property’s value to determine the taxes. One “mill” equals one-thousandth of a dollar. For instance, if the property tax rate on residential homes in your area is 20 mills, you will pay $20 for every $1,000 in the assessed price. If your home’s assessed value is $350,000, you will pay $7,000 in taxes. In the case of a percentage system, it will be $17,500 at a 5% tax rate on residential properties.
Most property taxes have to be paid on an annual basis. However, if you feel the tax bill of your land or home is unreasonably higher, you can appeal to the local taxing authority for a reassessment.
Property taxes are a significant fund collection source for the local governments in the United States. They use this money to develop various public services and infrastructures.
Our client is a clinical research director at a top university in Singapore for the past 12 years, and his kids are all studying in the U.S. Being abroad for an extended period of time, he no longer had any credit history in the U.S. or FICO score.
How We Helped
He no longer had any credit history in the U.S. or FICO score. Although he tried with several local and international banks, he was unable to get a loan due to the lack of credit. As we see similar situations often, we knew what loan program would work best for our client. He was able to get a great loan and begin to reestablish his U.S. credit again. Something vital to him when he retires back in New York.
Our client was referred to by a developer in Houston, Texas who we worked with previously. The client is a Canadian real estate investment company looking to purchase a hotel as well as in Houston, Texas. Due to the covid-19 impact on the hotel industry, the borrower was able to secure a very competitive price on a non-flagged hotel property in the U.S.
How We Helped
Due to Covid-19, almost all lenders are on pause with hospitality finance requests, due to the inherent risk of the hotel industry and travel being shut down/limited around the world.
Our client was able to utilize a Bridge Loan to secure the purchase of the property. Once the Covid situation improves and travel opens back up, the borrower will refinance with a traditional longer term commercial loan. With the discounted purchase price, the more costly bridge loan for a few years made sense. (Also see Can a Canadian Buy a House in the USA?)
America Mortgages Inc. is a mortgage broker focusing only on U.S. Expats and Foreign Nationals living overseas. We offer over 150 U.S. bank and lender programs direct to our international clients. America Mortgages is wholly-owned by Global Mortgage Group Pte. Ltd. an international mortgage specialist based in Singapore.
