Who, stateside, doesn’t at least want to entertain the idea of calling it a long work week, heading to the airport and then a few hours later touching down on one of the Hawaiian islands? What if you’re on the cusp of that reality and have decided to buy a second home in Hawaii and need a jumbo mortgage to help you achieve that goal? I am a licensed mortgage loan originator in Hawaii, can help and here’s what my clients need to know.
What Is a Second Home?
While any vacation residence may seem to fit the bill, true second homes have specific, defining characteristics in the eyes of a mortgage lender. For us, a second home must meet these three guidelines:
- Must be a reasonable distance from your primary residence. Since we’re going to assume you live in the contiguous 48 or Alaska, this is likely the easiest hurdle to clear.
- Must be suitable for your year-round occupancy. This goes hand-in-hand with the point to follow, but think of it this way. Your vacation home is yours. That means if you decide to show up for an impromptu weekend or an entire month of the winter, you don’t have to move anybody out. The home is always there for you when you want to occupy it for any amount of time.
- You must not enter into any rental agreements. Sure, AirBnB and VRBO have muddied the waters considerably but if you’re going to purchase a home, the true test is your intent. If you plan to make money off of the property, then you technically have an investment property and not a second home and your lender may approve or deny your loan application on that basis. And let’s be very serious. If you deceive your lender into approving a second home mortgage, presumably to take advantage of a lower rate and smaller down payment requirement, and then begin renting out the property, you could be in serious trouble on a Federal level. Just don’t do it.
We Can Handle the Big Surf Too
Namely, if you need a jumbo mortgage we can go up to a loan amount of $3,000,000 with as little as 20% down ($3,750,000 purchase price). But even if you simply desire a small, quiet place in your own corner of paradise, then conforming loans are a good choice and for those price points you can put as little as 10% down. Second home condominiums require an additional layer of care and I’m going to cover those in a separate blog post to follow.
Ohana On a Mission
As a 3-time Hawaii Ironman Triathlon finisher and Honolulu Marathon veteran, I have a deep respect for the culture of the islands. I made it a life goal of mine to test the boundaries of my physical capacity in that most beautiful of challenging environments. But you know what? Business is done differently in Hawaii and for some on the mainland, both the time change and the different pace of life can add stress in the process of obtaining a mortgage. Of course, there are many capable mortgage lenders on the islands, but if you choose to work with someone remotely, my team is ready to treat you like family and get the job done with professionalism and efficiency.
Thinking about buying a vacation home on Oahu, Maui, Kauai or the Big Island? Get in touch and let’s talk story.
Robert J. Spinosa
Vice President of Mortgage Lending
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
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