Using VA above the conforming limit

Did you know that VA will allow you buy above the conforming limit of $625,500?

I was just told yesterday that you can buy a house over that amount, if you have 25% down on the amount over the limit. So if you are buying a house in Kailua for $700k, you just have to have 25% of the $74,500 by which you have exceeded the limit. In this case it would be $18,625.

Of course you'll have closing costs on top of that, so it's not quite as easy as the zero down VA loan which so many military families love. But if you want to live in one of the more expensive areas like Windward Oahu and Hawaii Kai, this option may be the best thing for you.

Usually, military families buy homes in cheaper areas like Mililani, Waikele, Royal Kunia, Kapolei, and Ewa Beach. But some of the higher ranking guys get a very nice housing allowance, which means they can afford the payment on a great house in either East Oahu or the Windward side. In that case, I would recommend either talking with Navy Federal credit union about their Veteran's Advantage program, or using the VA jumbo loan.

In places like Royal Kunia and Mililani, houses can be well over the VA loan limit, so having alternatives is important. A nice house in Mililani these days is running right around the $650k mark and looks like this.

A bad lender can ruin your life. Even life in Hawaii.

A friend of mine recently told me a very sad story. When they purchase their first home in Makakilo last year, she said the lender they worked with "screwed us over."

My friend should have easily qualified for a VA loan, but instead this lender used a conventional loan and lied about their income without telling them. In the end, the result was they owned a nice condo in Oahu, but they had a mortgage payment they couldn't afford with a prepayment penalty.

I wish this was the only story I had heard like this, but it's just one of dozens. Another client of mine had found a lender online that promised them great rates on the house he was buying in Kamehame ridge, which is a nice upscale community in the back of Hawaii Kai. But then the lender changed all the terms on the day of closing, when it was too late for him to find a new loan.

Sometimes buying a house in Hawaii can be a little too dreamy for people, and they can lose sight of the fact that it's still a huge financial move. You still have to shop for a loan, find a good reputable lender, and make sure you don't get screwed over.

How can you find a good lender in Oahu? For one thing, if the lender you're working with is new in the business, run for the hills. It takes at least 2-3 years for a loan officer to learn the business. In Hawaii the laws are very specific to this state, which means there's more to learn than in other states.

Also, you should check your lender's references. Find a few of his past clients and see if they did a good job and delivered the loan that fit the quote given at the time of application. You might also want to check and see if there are any complaints filed in the state he is licensed in. In Hawaii, mortgage brokers and lenders can be checked out with RICO, the regulated industries complaint office.

How can you tell if you're getting a good loan? The only way really is to have another lender look at it. I tell people to send their good faith estimate to a competitor. Also if you don't end up getting the deal you were quoted, walk away. Even if it's the last day of closing, don't let your lender make a move like that. It could stick with you for a long time.

The worst case scenario is that you have a payment you can't make, so you end up missing payments, and in a few years you could be facing foreclosure.

Need a good lender in Oahu? Thinking about buying a home in Hawaii? I've got several I can confidently recommend. Email me!

Have you ever heard of Paiko Lagoon?

If you live here in Oahu, you've probably driven right past Paiko Lagoon without ever noticing it. Even though it's just one turn off of Kalanianaole Hwy, it's a sort of secret spot for locals. With fantastic ocean front homes, a sandy beach, and nice calm water, it's the best kept secret in the Hawaii Kai area. I say "area" because it's not quite in Hawaii Kai, but actually considered part of the Diamond Head region in the Honolulu MLS.

This is kind of unfortunate, because Diamond Head makes people think of something very specific, something very not Paiko Lagoon. Paiko is a lot more like the Portlock area in that the shoreline is flat with small sandy or rocky beaches, and no waves at the shore. There are nice waves about a half mile out though. The water looks like this:

If you want to live in an ocean front home in Hawaii and you have about $3million, Paiko Lagoon might be for you.

This home sold for $3.3million a while back, with a great pool and as you can see, a very tropical island feel. You can live right on the beach or right across the street from the beach for about half the price. Some of the homes here in Paiko Lagoon might remind you of Portlock and other areas of Hawaii Kai, with their large open layouts and high price tags.

It's only about 2 miles from Paiko Lagoon to the middle of Hawaii Kai, with Costco, the Koko Marina center, and everything that you love about Hawaii Kai. So why is it included in the Diamond Head district? Beats me. It's farther to Diamond Head than it is to Hawaii Kai, so I guess it's just because Paiko Lagoon is west of the actual sign on Hawaii Kai Drive.

If you want to buy oceanfront property in Hawaii and you would like a nice beach with year round calm water, this is the place for you, for $3million.

The cost of living in Hawaii is about to get a little worse

A lot of people ask me how much our electricity bills are here in Oahu, probably because they have heard that it's expensive to live in Hawaii. Actually our power bills are about the same as CA. The typical bill is about $139 according to Hawaiian Electric company (HECO).

However, Star Bulletin reported today that the state Public Utilities Commission let HECO increase its rates by 4.96 percent immediately while it considers granting an even larger permanent increase.

The effect on a typical bill will be that it goes up $6.61 a month, to $143 from $139.39. The effect on HECO will be that they get Extra revenue of $70 million per year. Holy cow. Can I raise my rates to get $70 million extra please?

The bottom line is that our power bills are not much higher (or not any higher) than many cities in the country. We don't actually run our AC's most of the year, because it's just not that hot most of the time. If you live on the West side of Oahu, it's going to be a little hotter.

Power bills are higher in Ewa Beach, Waikele, Makakilo, and Kapolei, since it's hotter over there and the wind doesn't blow as much. In Kailua and Kaneohe, the wind and rain keep it nice and cool so you'll have a cheaper power bill. I guess it's only fair since you pay so much more for real estate on the Windward side anyway. It's doesn't even out though, not even close.