Why Local Lenders are Important in Hawaii Real Estate Transactions
Why is a Local Lender Important in Hawaii?
Whenever I start working with a buyer who plans to finance their purchase, my first question is, “who is your lender?”
I cannot stress enough what an important decision this is. It can make the difference between a smooth transaction or a complete nightmare with possible failure to close at all. Things are different here in Hawaii. We have quirky situations that don’t occur in other places. Lava insurance?? Our local rules, regulations, and timelines are often not appreciated by mainland or foreign lenders. For instance, many well known large companies in other states do not comprehend the time it takes from a loan being signed, then funded, to actual recording and closing. Outer island escrow companies must send documents to Honolulu two days before they are recorded at the Board of Conveyances, and the transaction is officially closed.
Just the difference in time zones can make communication difficult. A lender on the east coast is often closed for business by 11 am Hawaii Standard Time. I recently dealt with an American buyer living in China, and the lender was in Michigan. The 12 hour time difference restricted communication to mostly email. They couldn’t just pick up the phone and sort things out.
Ask your Realtor about their experiences with nonlocal lenders. They will have several anecdotes about lender’s assurances that there is no problem funding in Hawaii, they “do it all the time.” Then at the eleventh hour, they cannot do it. I’ve had clients wanting to use their private bank or a bank with whom they had a good experience previously. When they later run into trouble, closing is delayed, or they are not getting a great deal, they have regrets. Heed your Realtor’s warnings.
How Do I Choose a Lender in Hawaii?
You can go straight to a financial institution or use a mortgage broker based in Hawaii. A mortgage broker will most likely have more options for you to choose from. It’s best to shop around not just for the best terms, but the best service.
Ask your Realtor who he/she has had the best experience and service with as well as the ones to avoid. They can usually offer a handful of suggestions as a starting place. Remember, they may deal with about 10-20 lenders a year, maybe more. How often do you take out a loan?
I recently had an outstanding experience with Element Mortgage, based out of Honolulu. I represented the Seller, and the Buyer used one of the big-name online mortgage brokers whose name I will not mention. Instead of a “quick” and easy 45-day escrow, it was over 70 days before all parties realized the lender was never going to get it done. The buyer went to Element Mortgage and had the loan approved and closed in less than 30 days. Meena Na at Element is proof of what can be done by focusing on solutions and going the extra mile.
Another example of a “can do” mortgage broker is Alan Van Zee at Hawaii Mortgage Company in Honolulu. Our buyer’s purchase was contingent on the sale of her home, and the closing date was a moving target. He reacted quickly to changes and closed five days early, saving his client the expense of renting back. Our client works with him exclusively.
Some Hawaiian banks and credit unions do an outstanding job providing home loans. I’m just finishing a purchase for first time home buyers who financed with their own American Savings Bank. Larry Lau in the Kamuela Branch was extremely efficient, personable and also funded the loan early. His communication throughout the process was excellent. Communication is key, especially when you run into a snag. Unfortunately, the usual response to queries when things aren’t going well is NO RESPONSE. Suddenly your friend, the lender, is unavailable to you. This not only compounds the frustration but makes the real estate agent lose confidence in that lender.
These are just a few of the exceptional people working in Hawaii to help people purchase property. I can easily name half a dozen or more professionals that I would highly recommend.
Looking for Your Hawaii Home?
Whether you are looking for financing for land, home, or condominium, there is a loan available to suit your needs. Whether you are a Veteran or First Time Homebuyer, there are loans available to suit your needs. Interest rates are very low, and most institutions have competitive rates. Make sure you are working with someone you like and trust and also has a proven track record in Hawaii.
If you want to talk about buying in Hawaii, feel free to reach out.
Beth Thoma Robinson, R(B)
October 16, 2019
Great post, Lisa. You are correct, we all have the stories of what went wrong with various Mainland lenders…and the stories of the local lenders who know what to expect in our particular environment