All Forum Posts by: Bryan Plumb

Thanks everyone, we're now working with a great Maui lender who has earned our business due to multiple factors over the last couple weeks. We did lose out on this property to (probably) a cash buyer... but are continuing to pursue properties as they present themselves.

Regarding the attachment... I'm able to zoom in and see the line items, and another user was able to as well. Curious if that's not the case for others? Oh well.

Hey everyone,

We are buying a condo in Hawaii and received our estimated closing costs for our pre-approved loan. This is our first investment property, but I did know to expect higher fees in general. However, was curious if 2.5% was a normal loan origination rate for HI right now? Attached is a breakdown of the estimated fees (loan officer said he estimated high).

Quote from @Chris Bruni:

While I am not a credit analyst or a banker, I do not think utilizing the HELOC would impact your credit score - you said, "killing your credit". I currently have two HELOCs open on two different residences and have tapped them both at the same time before (currently only one has about 30% of its potential being utilized). While I did not like limiting my flexibility while I did tap them both, I saw no impact to my credit score. But perhaps I am missing something in your comment?

HELOCs give you more flexibility (in how you pay them back) than a traditional amortized loan.  But you do have options and are in a great place that way.

 I made that comment about killing my credit, erroneously based off reading some others that stated it online. After asking my loan officer about that, she debunked that fact.

Quote from @Chris Bruni:

Having just returned from a Hawaii vacation, this post caught my attention.

Depending on your comfort level with the ARM you currently have and prospective interest rates down the road, you may not want to refinance your current loan, although that is certainly an option.

For quicker cash without the major expense of a refi, I have found it very easy to get a HELOC (home equity line of credit) on my primary residence and use those funds to build investments. Many institutions will have very low cost options (just a few hundredt dollars) to get started and they can happen more quickly. You may also find that the first year interest rate charge to be very low (2% or less) and its simple interest so you can pay down the debt much faster than an amortized loan.

Keep in mind that there are financial risks no matter which way you go.

I did decide to go with the HELOC :) It's processing as we speak, looking forward to that first investment property soon!

Quote from @David Bain:

Quote from @Bryan Plumb:

Our situation:

End goal is to have a single family home in Maui in a few years...

We have roughly 257k equity (conservative estimate) in our single family home after about 7 months of ownership (thanks to locking in our purchase price a year before we closed).

My current primary residence mortgage is a 10/1 ARM at 2.75%

The house payment is easily covered by only one of our incomes (I'm married) and I've recently got a pay increase that is more than our current monthly mortgage.

My desire is to buy an investment condo in Maui, and rent it out at about break even.... to either move into when we move to Maui or to sell our current primary residence and the condo for a single family home in Maui.

I need roughly 140-150k for condo downpayment and have about 30k currently.

Would the best move be to do a cash out refinance to get the rest of the needed funds?

Quite a beautiful island to call home.  Sounds like you have done excellent on your primary in the meantime!  

Thanks David, yes it's a great place.... perfect middle ground between the ultra slowness of Kauai and the downtown craziness of Oahu :). I know that HI real estate isn't great for cash flow, but this is more of a combined approach of us (worst case) living in the investment property eventually. If I was only looking for cash flow, I'd be looking at places that were quite a bit cheaper.

Quote from @Chris Bruni:

Having just returned from a Hawaii vacation, this post caught my attention.

Depending on your comfort level with the ARM you currently have and prospective interest rates down the road, you may not want to refinance your current loan, although that is certainly an option.

For quicker cash without the major expense of a refi, I have found it very easy to get a HELOC (home equity line of credit) on my primary residence and use those funds to build investments. Many institutions will have very low cost options (just a few hundredt dollars) to get started and they can happen more quickly. You may also find that the first year interest rate charge to be very low (2% or less) and its simple interest so you can pay down the debt much faster than an amortized loan.

Keep in mind that there are financial risks no matter which way you go.

Thanks for the reply Chris. My current opposition to a HELOC is the fact it would be almost fully utilized for a while…. Killing my credit. Other than that, I'd be totally on board with that approach. Thoughts on having such a high utilization rate for a while?

The current quote I have for a cash out refi is 30 yr fixed at 4.25%, 14k closing costs… but that would be looped into the new loan. 115k cash out, that would give me enough cash on hand to buy a condo, then put Tenants in it and the whole hit we’d feel is temporarily having to start over savings-wise. (No concern there we make plenty extra monthly and savings would add up quickly).

Our situation:

End goal is to have a single family home in Maui in a few years...

We have roughly 257k equity (conservative estimate) in our single family home after about 7 months of ownership (thanks to locking in our purchase price a year before we closed).

My current primary residence mortgage is a 10/1 ARM at 2.75%

The house payment is easily covered by only one of our incomes (I'm married) and I've recently got a pay increase that is more than our current monthly mortgage.

My desire is to buy an investment condo in Maui, and rent it out at about break even.... to either move into when we move to Maui or to sell our current primary residence and the condo for a single family home in Maui.

I need roughly 140-150k for condo downpayment and have about 30k currently.

Would the best move be to do a cash out refinance to get the rest of the needed funds?