As mentioned in my last blog, interest rates are still inching down. They are so low, in fact, that they can’t really get much lower. According to Black Knight Financial, 8.2 MILLION borrowers can benefit an average of $266 per month by refinancing their current mortgage. Most costs of refinancing can be rolled into the new loan and recouped in about two years. Interestingly, about 35% of the mortgages that might benefit were originated in 2018, so even if you recently bought your home, it might make sense to take advantage of the unbelievably low rates.
VA buyers, in particular, should consider using a streamlined process called an IRRL (Interest Rate Reduction Loan). No appraisal is required, and paperwork is minimal. Speaking of VA, current loan limits appear poised to disappear. This means Veterans will be able to use their benefits on any size purchase. Remember, VA guarantees the loan. They are not the lender. As always, the Veteran must also qualify financially, and while ratios and credit scores are more liberal, they are still part of VA loan requirements. Also noteworthy is that Veterans are allowed to roll the cost of solar into a purchase.
Let the Sunshine
Speaking of solar, the requirement to add solar hot water to all new construction has been around for about 15 years. The State, however, had generally issued waivers when two energy efficient appliances (usually on-demand hot water and gas stove) were used in new construction. Following a 2019 court decision, builders are being informed that no new waivers will be issued. This ignores homes located in areas where solar is inefficient, or weather causes almost exclusive use of electric back-up. Not to mention the fact that it removes personal choice from the building process. Adding solar hot water will, according to my plumber, add $8,000 – $9,000 to new homes. Besides driving up the purchase price, consider (as outlined by Hawai’i Free Press on 7/15/19) that the interest on the additional cost of the solar hot water will add another $11,000 to the typical 30-year mortgage for a system that will likely need to be replaced before the mortgage is paid.
Because Puna and Ocean View are among the most affordable areas of the State, they will be hit the hardest. Low interest rates will help outset the increase for a while. Last in this overview of what’s new and changed is a recent amendment to State law that allows a handyman to do jobs up to $1,500. A handyman is not supposed to separate jobs to circumvent the job limit. Jobs are supposed to include materials. While it’s a step in the right direction, I know few, if any, licensed general contractors who will even look at a job so small. And what if the owner already has materials? Remember, a handyman is not licensed. For licensed individuals such as a REALTOR, hiring a handyman for a job that surpasses the allowed limit could result in a fine for aiding and abetting an unlicensed individual.
Hard to believe July is pau, see you again in August!