APR stands for “Annual Percentage Rate” and represents the price you pay to borrow money. APR is a broader measure than interest rate because it includes the interest rate plus other costs such as lender fees, closing costs and insurance. You can use APR to compare loans offered by different lenders when shopping for a mortgage loan.
For example, based on a purchase price of $500,000; loan amount of $400,000 (20% down payment; 80% loan-to-value); interest rate of 4.00% and 1.00% points, the monthly principal and interest payment on a 30-year fixed rate mortgage would be $1,909.66 and an APR of 4.119%. Keep in mind your mortgage loan monthly payment will be higher as lenders typically include proerpty tax and insurance costs.
- Step 1: Get Pre-Qualified
- Step 2: Shop for a home
- Step 3: Close on the home
Yes. So then, what is a mortgage? A mortgage loan, often known simply as a mortgage, is a loan from a financial institution like American Savings Bank to a borrower to purchase a house. Mortgages can also be used to purchase an apartment or condominium. There are various types of mortgages available for Hawaii residents, including options for first time Hawaii home buyers as well as U.S. military active duty and veterans.
Getting a mortgage in Hawaii may seem like a daunting task, but a knowledgeable mortgage expert can help you through the process. The first step to securing the right mortgage for your new home is to know what you can afford. Once you know how much you can afford on a mortgage each month, you can start the mortgage application process. Finding a local mortgage officer, like the mortgage loans team from ASB, will make it easy to figure out how much of a mortgage you need and can afford.
Before you fill out any mortgage loan applications, there are steps you can take to make the process easier. Your credit score is a major factor in determining if you get approved for a home mortgage loan. Check your credit score before applying for a home loan in Hawaii and look over your credit report for any errors. If you have a strong credit score, you are more likely to be approved for a loan and may receive a better interest rate. Once you’ve determined that your credit score is in good standing and have decided on a type of mortgage loan, you can fill out the mortgage loan application. You will likely need various financial and tax documents to complete the application. Often a lender will require your W-2 or paystubs to confirm income, as well as bank statements and statements from retirement accounts like a 401(k).
A mortgage loan works by a financial institution lending you the money to purchase your dream home in Hawaii. You are then required to pay back the amount of the loan plus interest over a period of time. Mortgage loans are usually paid in monthly payments that include payment towards the principal, or balance of your mortgage loan, and interest costs. Your monthly mortgage loan payment may also include other costs as well, such as homeowners insurance. There are a variety of home loans available for qualified homebuyers in Hawaii. When choosing a mortgage loan, you’ll want to consider the different loan terms available to you. The length of time you will pay the loan back, the interest rate, and how much of a down payment you are required to have are all important factors in choosing a mortgage loan. For example, many home loans in Hawaii are available with a fixed interest rate for a period of either 15 or 30 years.
There are so many factors to considering when choosing a home loan, it can be difficult to know how to pick. Finding the right mortgage loan for your home in Hawaii doesn’t have to be confusing with the help of our local home loan experts.
Home Purchase Loans
Home purchase loans are used to buy a house and are the most common types of loans. Loan types include:
- First Time Home Buyer Loans: Options to save money on down payments and other costs through first-time homebuyer loan programs.
- Conventional Home Loans: If you’ve established good credit history and have the cash available for closing costs, a conforming loan or conventional loan provides a straightforward homebuying process.
- Jumbo Loans: For homes outside of the conforming loan limits, Jumbo loans gives you the option to buy a high-value home.
- VA Loans: VA loans are backed by the U.S. Department of Veterans Affairs and give eligible veterans and military service members access to great rates, low to no down payments, and more.
Refinance Loans allow you to change the terms of your existing mortgage loan to better suit your financial situation or take advantage of decreased home loan rates.
Found the perfect spot for your next home? You can get the money you need to purchase the lot for your home and either build it right away or wait until you’re ready.
In addition to the many different types of home loans available, there are two interest rate options when financing a home purchase: fixed-rate and adjustable rate. A fixed-rate mortgage loan provides you with a locked-in rate for the life of your loan. If you wish to change the rate, you’ll need to refinance your loan. Most Hawaii residents choose this option when financing a home. Fixed-rate mortgage loans allow you to know how much money you’ll spend on interest over the life of your loan as well as what your monthly payment will be. Most fixed-rate mortgage loans are either terms of 30 years or 15 years. An adjustable rate mortgage loan, known also as an ARM, has an interest rate that can change periodically. Most adjustable rate mortgage loans begin with a set number of years that have a locked-in interest rate. A 7/1 ARM is the most common type, which means that the first 7 years of the mortgage loan will have a fixed interest rate. After the initial 7 years, the interest rate is variable every 6 months, meaning it could change every 6 months. The initial interest rate is often lower than fixed-rate mortgage loans. Adjustable rate mortgage loans can be a smart option if you plan to move before the fixed interest rate expires.
There are a few items you must consider before applying for a mortgage loan. We recommend that you have a good understanding of how much you want to borrow, what your credit score is, and that your financial information is readily available.
Jumbo Loans are any loans over the conforming loan limit set annually for each county by the Federal Housing Finance Agency.