Buying Advice

Real Estate and Financing

In a seller’s market in which we find ourselves right now, it is fair to say that “time is of even more essence” than usual. With multiple offers on the table for the same property, those buyers who have done their “homework” and gotten their financing ducks in a row, stand a better chance of closing on their dream home. While cash still is king, many Buyers find it beneficial to get a prequalification letter or conditional pre-approval letter to accompany their offers, in fac, in this market they are pretty much a must; it strengthens their position and presents Buyers as serious rather than “fishing” or unprepared.

Sources of financing can go beyond the Conventional and Non-Conventional Mortgages available. Savvy buyers use a combination of the strategies below:

  • Line of Credit on pledged investment assets. This short-term financing option can allow you to close quickly, or to make that down payment without liquidating your portfolio, until you secure a longer-term home financing.
  • Eligibility based on investment assets and not income. Unless you receive a regular pay check from your employer, it can be frustrating to secure a long-term mortgage without proven regular income to show for. Especially for retirees and investors, leveraging their investment assets may be a viable alternative.
  • Non-conventional Interest Only loans (lower rates, all interest deductible) – for investor Buyers who don’t hold on to a property for 20 or 30 years, an interest only loan may offer advantageous cashflow options. Or consider a No Points 15-year or 30-year Fixed rate.
  • Relationship pricing (inter-generational for client family members). Often times Financial Services Firms provide Next-Generation family members access to the same discounted mortgage rates as their parents and grandparents. And as it becomes more common for parents and grand-parents to make the down payment for their children’s first home, instead of gifting or lending money for a down payment, you can pledge assets to satisfy the down payment requirement.

On a side note, a Sale-Leaseback transaction might be appealing to the Seller, as it will allow them a stress-free move, especially when they leave the islands due to life, family or work situations.

If you are interested in learning more, please give me a call.

Marco Schlesser
Realtor Associate (RS-79457)
Hawaii Life Real Estate Brokers

Disclaimer: Content in this blog for information purposes only. You should always consult with your personal tax advisor or attorney for matters involving taxation and estate planning.

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