Hawaii is renowned for its idyllic landscapes, pristine beaches, diverse culture, and vibrant hospitality. However, living in this paradise comes with a price tag, and it is generally considered one of the most expensive states in the US. Nevertheless, there are still affordable gems for renters tucked in these islands, based on factors such as population, median income, and median home value. Notably, among these affordable places is the city of Kailua. This city boasts a fair share of the Hawaiian charm at a relatively affordable cost for renters, making it an ideal place to consider when looking for pocket-friendly places to live in Hawaii.
Kailua, HI
Kailua, located in Honolulu County on the island of Oahu, is a city that beautifully captures the essence of Hawaii. It boasts a population of 37,900, a median income of $122,706 and a median home value of $992,100. The two-bed asking rent is reasonable at $2,450 given the city’s offerings and Hawaiian cost of living, scoring it favorable for renters.
Kailua is more than just an affordable city; it offers a rich quality of life with its array of offerings. This coastal town is known for its stunning Kailua Beach Park, which is popular amongst wind-surfers and kayakers. Additionally, it’s also home to the tranquil Lanikai Beach, perfect for those seeking peace and serenity.
For the outdoor enthusiasts, there is the picturesque Maunawili Falls, a popular hiking trail leading to a waterfall and swimming hole. The town also has a vibrant shopping and dining scene, with Kailua town center boasting numerous unique shops, restaurants and farmers markets. Furthermore, Kailua’s proximity to major roads such as the Pali Highway provides easy access to downtown Honolulu, offering the perfect balance between island tranquility and city conveniences. With these features, Kailua indeed offers a great place to live for renters seeking the Hawaiian charm at affordable rates.
Methodology
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices. Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent. Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
Larger than life and usually bold in color, mural walls could not get any more popular than they are today. In fact, it seems like most cities across the country have beautiful murals popping up around every corner.
Take a look at 10 cities in the U.S. making a splash with tourists and locals alike for their beautiful murals right now — some of these locations may even surprise you.
In the city of Atlanta, you will find over 70 streets named “Peachtree” and more than 1,000 beautiful murals. It doesn’t matter what neighborhood you’re in here — you’re almost guaranteed to run into a “Peachtree” street and an inspired mural. It’s the Atlanta way.
The Eastside Trail of the Atlanta Beltline is a must-see. Plan to walk the 3.1 trail — it’s the largest art and sculpture park in the southeastern U.S. Afterwards, swing by Atlanta’s Cabbagetown neighborhood to explore the Krog Street Graffiti tunnel and the outdoor mural gallery along Wylie St.
From there, head to Edgewood Avenue, where you’ll cover both the Old Fourth Ward neighborhood and the historic Sweet Auburn neighborhood. Sweet Auburn is where the famous John Lewis mural is.
If you want to snap a selfie with Atlanta’s Big Boi and Andre 3000, head to Little Five Points and check out the towering mural of the iconic Outkast behind Wish Gallery.
Baltimore really lives up to its nickname, “Charm City” — especially when it comes to the public art lining its seaport city streets.
Home to more than 250 beautiful murals, Baltimore has curated an outdoor public museum for residents and tourists to marvel over. If you’re visiting, make sure you head to the charming neighborhoods of Hampden and Remington to check out their diverse and colorful murals. East and West Baltimore and Station North neighborhoods are must-sees too.
Also, if you are looking to leave your own mark on this Maryland city, pick up a can or two of spray paint and head to Graffiti Alley. Located off North Ave and Howard St. in Station North, Graffiti Alley is a safe space for artists to express themselves legally. In fact, Graffiti Alley saves the City of Baltimore over $300,000 a year on graffiti clean-up.
Home to more than 180 breathtaking murals, Cincinnati is a haven for artists and art lovers alike.
Thanks to its impressive local community art organization, ArtWorks — over 200 murals in over 36 neighborhoods turn the city into a public art gallery. In addition to all the beautiful murals in the Queen City, ArtWorks collaborates with youth apprentices and professional artists to create functional sculptures around the city streets like bike racks.
Looking for even more artistic inspiration in this colorful metropolitan area? Head to the numerous art museums like the Cincinnati Art Museum, the Contemporary Arts Center or the Taft Museum of Art.
Typically, the first thing that comes to mind about the city of Detroit is its deep ties to the auto industry — this is how it developed its nickname “Motor City,” after all. However, modern-day Detroit is a canvas for public art — inspired by the artists that continue flocking to this Midwestern city.
Just like with the auto industry, Detroit also has deep roots in murals. In fact, in 1932, the Detroit Institute of Art commissioned Diego Rivera to paint murals on the D.I.A.’s Garden Court.
If you’re looking to see what Detroit street art has to offer today, make sure you visit Eastern Market and the two-mile, below-street level greenway Dequindre Cut. Also, the Z Parking Garage has 130 murals — making it a must-see. And don’t forget to get lost in adventure on the Grand River Creative Corridor — there are 100 murals and exhibits to explore!
There’s also the Murals in the Market festival, an annual event where local, national and international artists come to Detroit and paint their breathtaking murals in Detroit’s most beloved farmers market area.
Nestled between Waikiki and downtown Honolulu is one of Hawaii’s most beloved neighborhoods — Kakaako. With beautiful murals decking the walls of this industrial district, tourists and locals alike love the vibrant revitalization happening in this Oahu neighborhood.
Since 2011, the Kakaako neighborhood is home to the Pow! Wow! street art festival. Each year, hundreds of local and international artists flock to Oahu to create and collaborate on murals. The Pow! Wow! Street festival also offers art exhibitions, concerts, live art installations, artist lectures and creative community spaces.
Thanks to this festival, there are more than 100 awe-inspiring murals to see in Kakaako. Make a day out of it on a self-guided street art tour or opt for one of the many guided art tours to immerse yourself in the story of how art revitalized this neighborhood.
If you’re looking for a city that truly appreciates the arts, look no further than Nashville. Formally known as “Music City” because it’s also the “Songwriting Capital of the World,” Nashville is making its mark in a new way and it’s quickly turning into one of the most Instagrammable cities in America — thanks to its beautiful murals and creative street art installations.
In comparison to other cities on this list, Nashville excels at using any and all spaces as a canvas. In fact, who needs a wall when there’s a water tank or old silo to paint? Prepare to find yourself impressed once you see just how creative Nashville gets with some of its murals.
To get an immersive experience of the Nashville mural scene, make sure you head to The Gulch, 8th Avenue & Melrose, the Charlotte Corridor, West End and Elliston Place and East Nashville. If your cowboy boots are up for more walking, head to the Frist Art Museum. Located in the city’s historic U.S. Post Office building, which is on the National Register of Historic Places, the Frist is an important cultural hub in the art community here!
Home of Gritty (the official mascot for the Philadelphia Flyer’s National Hockey League Team), cheesesteaks, Rocky and the Liberty Bell, Philadelphia already lives up to its reputation as the “City of Brotherly Love.”
However, thanks to its long history of supporting public art endeavors, Philadelphia is now one of the most renowned art cities in the world, earning it another well-warranted nickname — the “Mural Capital of the World.”
Since 1984, Mural Arts Philadelphia has helped produce more than 4,000 works of community-based public art in Philadelphia and the organization is now the nation’s largest public art program. Because of this city-wide commitment to beautiful murals and street art, Philadelphia as a whole is a living, breathing art gallery that its residents and tourists can experience around every neighborhood.
When you think about Oklahoma City, public art is probably not the first thing that comes to mind — but it should. Oklahoma City’s mural scene has exploded, completely turning the city into an outdoor art gallery that’s aesthetically hard to top!
First off, make sure you head to the Plaza District. This area is home to Plaza Walls — a curated, rotating mural project produced by The Oklahoma Mural Syndicate. Since its launch in 2015, the Plaza Walls has become the top attraction in the district (and rightfully so).
Besides visiting the Plaza District, make sure you wear your most comfortable walking shoes and stroll the Western Avenue corridor for highly Instagrammable murals alongside eclectic restaurants and bars, retail shops and boutiques and, of course, art galleries. Oh, and don’t forget the tourist-friendly area of Bricktown — there are murals aplenty to explore here, too!
Along the Nevada-California border is “The Biggest Little City in the World” — Reno, NV. Although small in size, Reno boasts a lively arts scene heavily influenced by the Burning Man festival.
Currently, the Downtown and Midtown districts of Reno feature over 100 murals. Painted by local, national and international artists — these beautiful murals add color to Reno’s high-desert landscape. There’s even an annual 24-hour Mural Marathon competition held on the side of one of Reno’s most beloved casinos, Circus Circus.
Art installations and sculptures also pop up in Reno, taking street art to a new level. Check out the sculpture garden in Bicentennial Park or head to Reno’s Neon Line District to check out Burning Man sculptures. And, of course, make sure you do an art walk through the curated collection of regularly rotating installations throughout Victorian Square in Sparks, NV — only eight minutes from the heart of Reno.
With more than 150 murals, it’s no surprise that the capital city of the Commonwealth of Virginia, Richmond, is an art-loving community.
Nestled right along the James River, Richmond is home to murals from local, national and international artists. In fact, thanks to the street art explosion in the “River City,” tourism has even increased! It’s no surprise, though — who wouldn’t want to snap a selfie or two in front of larger-than-life murals?
To get the full mural experience in Richmond, make sure to explore the Riverfront Canal Walk. It’s an outdoor art gallery with plenty of gigantic murals (we’re talking 18′ x 32′ murals) to admire. The Riverfront Canal Walk area is significant for Richmond and its street art history — the inaugural RVA Street Art Festival started here in 2012.
Additionally, while you’ll find murals all over Richmond — plan to explore Carytown, Northside and Southside. Shockoe, Church Hill, Downtown, Monroe Ward, and Oregon Hill are must-see spots too. The Fan and the Museum District both offer even more dazzling “I have to take a picture of this” street art moments.
Appreciate the art
All of these cities wouldn’t be as colorful as they are today without the artists behind the murals and street art. So, whether you’re on vacation or just snapping a selfie in front of the new mural in your artsy neighborhood, take a moment to appreciate the hard work, creativity and artistry in front of you.
Also, if you post a photo of the mural on social media, remember to tag the artist. Many artists tag their social media handles on their work somewhere, so keep an eye out for that. Think of this gesture as a thank you for the free art experience!
Charlsie Niemiec has spent the last 10 years working as a content marketing and social media editor and strategist. With in-house experience ranging from The Elf on the Shelf to CNN to Piedmont Healthcare, Charlsie has freelanced for the last four years with clients ranging from ESPN to the Atlanta Beltline. When she’s not copyediting or scrolling on Twitter, she is walking her very scruffy wirehaired terriers mixes Leonard and Biscuit or probably watering one of her 54 houseplants.
Hawaii, with its lush landscapes, volcanic terrains, and mesmerizing beaches, offers a unique backdrop for the real estate market. The home inspection process here isn’t just routine—it’s essential. For prospective buyers, a home inspection not only reveals a property’s interaction with the unique Hawaiian environment but also offers a comprehensive view of its overall condition and potential challenges. Sellers, on the other hand, find value in providing clarity about their property’s strengths and vulnerabilities.
So whether you’re buying a home in Honolulu or selling a home in Waipahu, this Redfin article has everything you need to know about getting a home inspection in Hawaii, along with insights from local home inspectors themselves. Let’s get started.
ejs9 via Getty Tmages
Why should you get a home inspection in Hawaii?
“A Home Inspection initiated by the seller will increase the confidence of the buyer, reduce the time on the market, and lower the unknown risks faced by the buyer,” shares Inspect Hawaii.”A good analogy is the game of poker versus chess. In poker, cards are hidden from both parties to enable bluffing and guessing as part of the game. In chess, all the chess pieces of both parties are on the chess board and there is full transparency of information. A seller’s inspection is like playing chess instead of the current process which is akin to playing poker.”
“Buying a home in Hawaii, which is one of the most expensive and competitive places to live, can be a very emotional and difficult process,” shares Building Specs Hawaii. “Hiring qualified professionals, like an experienced home inspector, can help to alleviate some of the stresses and uncertainties that often arise. A professional home inspection provides valuable insight into a home and its components allowing buyers to better understand their potential new home and to best determine if it is the right one for them.”
Are there any specialized inspections that Hawaii buyers should consider?
In Hawaii, the tropical paradise known for its diverse landscapes and unique ecosystems, home buyers should be aware of specialized inspections that cater to the islands’ distinct conditions. Given Hawaii’s proximity to the ocean, a salt mist assessment can be valuable, as salt-laden air can accelerate corrosion on properties, especially metal components. Homes located in areas prone to volcanic activity might benefit from a geothermal risk evaluation. Additionally, given the high humidity levels, checking for mold or moisture damage is vital, particularly in enclosed spaces like basements.
“A home inspection in Hawaii is of paramount importance due to the unique environmental factors that affect properties in this tropical paradise,”says Square One Home Inspections. “The state’s high humidity levels can lead to hidden issues like mold and mildew, which may go unnoticed by the untrained eye. It is highly recommended that a home buyer to also complete a proper mold inspection.”
The state’s tropical climate can lead to pests like termites, making a comprehensive pest inspection critical.
“Termites are insidious. They can infest a house for months without being detected. In Hawaii there are two types of termites, similar in appearance but completely different in how they become established, the type of damage they do, the extent of the damage and how quickly the damage occurs,” shares Entomologist, Jamie Neely.
“Indications of infestations that are in their infancy are subtle and it takes an experienced eye to notice. Some types of construction are much more prone to infestation. Some areas of the islands have greater levels of infestation. Some high-rise buildings are more susceptible to infestation based on the design.”
“Termites are insidious. They can infest a house for months without being detected. In Hawaii there are two types of termites, similar in appearance but completely different in how they become established, the type of damage they do, the extent of the damage and how quickly the damage occurs,” shares Entomologist, Jamie Neely.
“Indications of infestations that are in their infancy are subtle and it takes an experienced eye to notice. Some types of construction are much more prone to infestation. Some areas of the islands have greater levels of infestation. Some high-rise buildings are more susceptible to infestation based on the design.”
Are home inspections required in Hawaii?
“I have been Inspecting properties on Oahu for over 20 years and you wouldn’t believe the flaws I have come across. I highly recommend home buyers hire a Home Inspector before their purchase although Hawaii does not require it,” recommends Akamai Home Inspection.
How much does a home inspection cost in Hawaii?
The cost of a home inspection in Hawaii can vary depending on several factors, including the location, size, and age of the property, as well as the specific services included in the inspection. On average, home inspections in Hawaii typically range from $400 to $800 or more. It’s essential to obtain quotes from qualified home inspectors in your area to get a precise estimate tailored to your property’s unique characteristics and the level of inspection detail you require. Keep in mind that while the upfront cost may vary, a thorough home inspection is a valuable investment in ensuring the condition and safety of your prospective home.
Can you sell a house in Hawaii without an inspection?
“You can sell your home in Hawaii without having a home inspection, but should you? It depends on many factors but we would recommend having a pre listing inspection to reduce the anxiety that comes with not knowing the outcome during the contingency period,” shares Architect Inspection Systems, Inc.. “It also gives you the opportunity to stand out as a seller by handing the buyers a detailed report on the condition of the home upfront, showing the confidence you have in your offer for sale.”
Hawaii home inspection: the bottom line
In the unique environment of Hawaii, home inspections take on special significance. At the heart of it, a thorough home inspection in Hawaii is not just about ensuring a sound investment; it’s about understanding and respecting the delicate balance of nature and construction in this tropical haven.
Right off the shore of Oahu island, Honolulu‘s skyline rises along the water. From crystal clear beaches to great hiking on Diamond Head and surfing on the North Shore, Hawaii is truly a paradise.
Honolulu is Hawaii’s business and cultural center, as well as the home to the Pearl Harbor naval base. Beyond tourism, Honolulu’s major employers are in the banking and transportation industries.
But, what if you wanted to live there and have access to that every day?
In 2020, Kiplinger found Honolulu one of the top 20 most expensive cities in the U.S. Honolulu’s cost of living is higher than most due to the city and state having to import goods from other places via boat or by plane.
When compared to the national cost of living rate, Honolulu clocks at 92.7 percent higher than the national average. That’s five percent higher than in 2021.
Still thinking of making Hawaii’s capital your home? Here’s a glimpse at the cost of living in Honolulu.
Honolulu housing prices
These days, as rent prices continue to skyrocket, housing costs are the first thing you should look for as a prospective resident. Monthly rent cost is one of the main lines of your budget — in theory, you shouldn’t spend more than 30 percent of your income on rent. In Honolulu, housing prices are 220.7 percent above the national average as of 2022.
The average rent in Honolulu for a one-bedroom apartment is $3,085 per month, a 29 percent increase from 2021. A two-bedroom costs $4,890 per month on average, a 188 percent year-over-year increase.
You’ll find the highest one-bedroom rents in Waikiki, home to Honolulu’s nightlife, high-end shopping and surf beach. If you move inland to Palolo, you’ll find more affordable one-bedroom rents at $1,600 per month on average, only four miles from downtown Honolulu.
Average rent prices in cities near Honolulu
If the hustle of downtown Honolulu is not for you, there are options across the island for more affordable housing in quieter neighborhoods. These neighborhoods’ rent prices have remained relatively stable in the past year.
Here are a few examples of the average rent for a one-bedroom apartment in cities near Honolulu:
Home prices in Honolulu
Just like across the mainland U.S., Honolulu is no stranger to a hot housing market and low inventory. After all, an island has only so many options for housing.
The current median home price in Honolulu is $565,000, an increase of nearly 11 percent over the past year. Homes are currently selling for about two percent above the list price, according to Redfin, and go pending in just 32 days with multiple offers.
However, when you look closely at the housing market, the median sale price for a single-family home in Honolulu is $1.3 million, while a condo falls into the $507,500 range.
Honolulu food prices
Living near the ocean has its perks. Honolulu boasts fresh seafood, delicious fruits and vegetables grown locally. Local dining is also influenced by Japanese culture and local Indigenous groups. Poke, spam and pork are the most popular dishes you’ll see.
You’ll find fine dining restaurants in resorts that cater to tourists, as well as food trucks and stands with delicious food for a more casual experience. Dining out for two people averages between $18 and $87.50 per person, depending on the restaurant.
You’ll find local breweries like Hana Koa Brewing Co. and Stewbum & Stonewall Brewing Co. serving cold pints.
For those looking to eat at home, groceries are 52.7 percent above the U.S. average in 2022. While some produce is grown on the island, most basic items come from the mainland U.S. or elsewhere in the world. Grocery food decreased five percent since 2021.
A steak at the grocery store will cost $19.39 and other foods like eggs ($3.97), milk ($4.05), potatoes ($9.17) and bread ($5.07) also are above the national average.
Staying on a budget is difficult in Honolulu, but a good balance between dining out and groceries can help.
Honolulu utility prices
Hawaii’s mild weather helps when it comes to heating or cooling your home. The average temperature in the hottest month in Hawaii is 88 degrees Fahrenheit and the lowest is around 60 degrees Fahrenheit. Nothing a fan and an open window with a sea breeze can’t fix.
This is a good thing since utilities cost 44.6 percent above the national average in Honolulu. While renewable energy is growing on the island, it’s still expensive to power up the city. An average electric bill can cost $318 per month.
Phone bills average around $182.61, on par with most U.S. cities.
Honolulu transportation prices
After rent prices, transportation is the second factor you should take into consideration. Distance to work, friends and family and favorite restaurants can make all the difference, especially as transportation costs get higher.
Transportation costs in Honolulu are 24.2 percent higher than the U.S. average (six percent lower than in 2021). While a car is always more convenient, gasoline prices have increased in the past year to $4.29 a gallon.
Also, when thinking about a car, you have also take maintenance into consideration. Car maintenance like a tire balance costs $61.60, higher than the national average. Parking in Honolulu is expensive, $4.50 per hour on average except for Sundays and holidays.
Luckily, Honolulu offers other methods of transportation, including the bus, scooters and even bicycles. The city has a 60 bike score, with bike lanes throughout. The walking score for Honolulu is 74, depending on the neighborhood.
For public transit, the HOLO bus costs $3 for a single ride, anywhere on Oahu island. You can pick them up at 7-Eleven or any supermarket on the island. A monthly pass is $80 for an adult, while a day pass costs $7.50 per adult.
Of course, taxis and ride-sharing apps are available but are more expensive. Just make sure that you’re near one of these options when looking at apartments in your budget.
Honolulu healthcare prices
Healthcare costs will depend on the individual and whether they have insurance. And even with insurance, costs will differ. Healthcare is 20 percent higher than the national average in Honolulu.
Going to the eye doctor will cost you around $162.96 per visit and the dentist, around $95.60. Prescription drugs cost around $528.75, while over-the-counter meds like ibuprofen average around $13.47.
Honolulu goods and services prices
Your budget should have items for recreation and household things like haircuts and dry-cleaning. Overall, you’ll pay nearly 30 percent more on goods and services in Honolulu than the national average. An average trip to dry cleaning will cost $23.64.
A haircut will set you back $17.36, while a more involved salon visit (think color, treatment, etc) will cost $73.80. It’s pretty high, especially compared with a West Coast metro like Seattle, where a salon visit is around $57.70.
For a night out, you’ll pay $14.58 for a movie, around $10 for a beer pint with pizza costing $14.99. That’s for one person, the costs can definitely add up.
Taxes in Honolulu
Another big factor you’ll have to take into consideration is taxes, both state income tax and sales tax. These taxes can add a significant burden to your budget unexpectedly.
In Honolulu, sales tax is 4.5 percent (4 percent from the state and 0.5 percent from Honolulu county). So, if you made a $1,000 purchase, you’ll pay an additional $45 in sales tax.
Hawaii’s individual income tax ranges from 1.4 percent to 11 percent, according to the Tax Foundation.
How much do I need to earn to live in Hawaii?
According to the U.S. Census Bureau, the average income in Honolulu (according to 2019 figures) is $87,722 per year. The average salary in Honolulu is $69,000/year.
An average one-bedroom in Honolulu goes for $3,150 per month. This means that you’ll spend $37,800 on rent annually.
It’s important to stick to the 30 percent as much as you can in your budget to allow you to have enough left over for groceries, recreation and incidentals. To find out if you can afford the cost of living in Honolulu, check out our free rent calculator.
Living in Honolulu
Honolulu, a paradise in the middle of the Pacific Ocean, can quickly turn you from a tourist to a resident, thanks to its mild weather and beautiful beaches. However, the cost of living in Honolulu is something to consider since island living is a little more expensive than the mainland U.S.
Whether you want to find a quiet neighborhood or live in the middle of Waikiki, there are beautiful homes available for you. Just make sure to check your budget — twice.
Find apartments for rent in Honolulu today!
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of August 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
On August 1, 2020, I took out a 7/1 adjustable rate mortgage (ARM) at 2.125%. I could have gotten a 30-year fixed-rate mortgage for 2.75%. However, I wanted to save 0.625% in interest.
Years later, mortgage rates have zoomed higher thanks to the pandemic, massive stimulus spending, a war in Ukraine, and supply chain issues. Inflation reached a 40-year high in June 2022.
Do I regret my decision to get an adjustable-rate mortgage over a fixed-rate mortgage?
My answer is “no,” and let me tell you why.
Why I’m Fine With An ARM Despite Higher Mortgage Rates
Back in 2020, we just had our second baby and wanted a fully remodeled home to house our family. We had been living in a home that was in the middle of a long gut remodel. Given I thought the remodel would take longer than expected, I decided to pounce on a nicer home.
I fully admit I did not anticipate inflation and mortgage rates surging to the levels we saw in 2022. However, despite higher mortgage rates, I still have no regrets getting an ARM.
I know I’m in the minority and will likely get heat for my views. But hear me out.
1) I’m saving money with an ARM
Instead of paying 2.75% for a 30-year fixed mortgage, I’m paying 2.125% for a 7/1 ARM. Every year that goes by, I’m saving almost $10,000 in interest expense.
Over the seven-year fixed duration, I will likely end up saving ~$65,000 in gross mortgage interest expense. Saving money feels great, not bad!
Even if I were to pay a much higher mortgage rate after my ARM expires, I have a $65,000 buffer before I start paying more due to getting an ARM. I calculate that break even period will start in the eleventh year of my ARM, even if mortgage rates stay at current elevated levels.
2) The house has appreciated in value
Buying the house in mid-2020 turned out to be a good move. The value of the house is up between $300,000 – $500,000, even after a 5% – 10% slump since 2022.
The combination of saving money on mortgage interest expense and experiencing home price appreciation feels lucky. The home price appreciation dwarfs any amount of increased mortgage payments I will need to pay after my ARM expires.
If the house depreciated in value, then I would still feel better knowing that I’m paying a lower mortgage interest than I had to. But of course, I wouldn’t feel as good.
3) ARM interest increases have limits
All ARMs should have a limit on how much the mortgage rate can increase the first year after the fixed-rate duration is over. Subsequent years also have interest increase limits. There is also a maximum mortgage interest rate limit increase for the life of the loan.
In my case, my mortgage rate can go up a maximum of 2% in year eight, another 2% in year nine, and up to a maximum interest rate of 7.125%.
Below is an example of an ARM interest limit increase of an $850,000, 5/1 ARM at 2.375%.
As you can see from the example above, the mortgage increases can go up every year up to a limit. Therefore, you can model out potential worst-case scenarios in the future to see if you’ll be able to afford your mortgage.
Thankfully, most people get raises and grow their net worths over time. As a result, they will be better able to handle higher payments in the future.
4) Mortgage principal gets paid down over time
Every month, $3,450 of my mortgage payment goes to paying down principal. In 84 months, when my 7/1 ARM expires, I will have paid off around $330,000 in principal.
If mortgage rates are higher in year eight, then I will pay a higher mortgage interest rate of up to 4.125% for one year. But I will also be paying interest on a ~20% lower mortgage balance.
As a result, my actual monthly payment will only increase by about one percent. Even if my mortgage interest rate increases by another 2% to 6.125% in year nine, my monthly mortgage payment will only increase by about nine percent.
The worst-case scenario of paying one percent to nine percent more in years eight and nine will be hardly noticeable. The average worker who receives two percent raises a year will easily be able to afford these higher payments.
5) Have the option to refinance
Nobody knows the future. However, before my ARM expires on August 1, 2027, I have the option to refinance.
It’s unlikely I can refinance to a similarly low rate of 2.125%. However, there’s a good chance I could refinance to another 7/1 ARM that’s under 4.125%, i.e. less than my first year adjustment’s maximum mortgage rate.
If I can do a no-cost refinance at a low rate, even better. Although you pay a higher mortgage rate in a no-cost refinance, if the mortgage rate is attractive, you’re still winning. Further, you retain the option to refinance again without feeling bad that you paid fees for refinancing.
I believe the long-term trend for inflation and interest rates is down. We’ve already seen inflation peak in June 2022 and come down every month since. I’m confident that sometime between now and August 1, 2027, I’ll have another window to refinance at an attractive mortgage rate.
Below is a chart that shows the historical trend of the average 30-year fixed-rate mortgage. Rates have been going down since the 1980s.
6) Fixed-rate duration of an ARM more closely matches my ownership duration
If I thought I was really buying a forever home in mid-2020, I would have been more inclined to lock in a 30-year fixed-rate mortgage and pay it down sooner. Instead, I got a 7/1 ARM partially because we will unlikely live in the house for much longer than seven years.
Based on my homeownership track record, we move every two-to-ten years given I’m an avid investor in real estate. My holding period is lower than the median homeownership tenure of roughly twelve years today.
I believe in buying a primary residence, updating it, living in it for at least two years to get the tax-free profits up to $250,000/$500,000 in profits, renting it out, and then buying another home. Over the course of a regular lifetime, a typical household could amass a four rental property portfolio by age 60 and retire comfortably off rental income.
Since 2003, I’ve been buying middle-class homes because that’s what most households can afford. I believe this is a smart way to invest in real estate. Investing in luxury property does not give as high of a return on investment.
Below is the average homeownership tenure from 2005 to 2022 according to Redfin. At about 12 years today, getting a 30-year fixed-rate mortgage is a big 18-year overshoot for the average homeowner. I’ve only owned my current home for three years and I’m already itching to upgrade homes. Know thyself!
Although I love our current house, I will likely be disappointed if we are still living in it seven years from now. This means we will have not relocated to Oahu. It will also mean we lived too frugally. In seven years, the house will likely decline to less than ten percent of our net worth.
As someone who has entered into his decumulation phase of life, my goal is to try and spend more money, not less. And one of the easiest ways to spend more money is to own a nicer house.
7) The worst case of paying more isn’t so bad
With principal paydown and the savings I’m accumulating from having a seven-year adjustable-rate mortgage, I will have a large buffer in case mortgage rates skyrocket in year eight and beyond. But let’s say mortgage rates do surge long after my savings buffer is exhausted. Not a big deal.
Chances are high that ten years after I first took out the 7/1 ARM, my net worth will be higher. That’s usually what happens when you continuously save and invest.
In an high inflation, high mortgage rate environment, we also get to earn higher risk-free income through Treasury bonds, CDs, and money market funds. For example, today we can all earn over 5% risk-free in one-year Treasury bonds. We can ride the inflation wave too.
Even if your absolute mortgage amount goes up, if the mortgage payment as a percentage of your income goes down, you will feel fine. There’s a reason why I encourage everyone to follow my 30/30/3 home buying rule.
8) An ARM keeps me motivated to grow more wealth by a particular time
Having an ARM motivates me to pay down debt quicker. When you have a shorter time horizon to get something done, you tend to be more focused.
If I had a 30-year fixed-rate mortgage, I wouldn’t work as hard, pay as close attention to my finances, or pay down debt as intentionally. With a 5/1, 7/1, or 10/1 ARM, I treat the introductory fixed-rate period as a deadline to earn as much as possible and/or pay down as much mortgage debt as possible.
One of the key tenets of a Financial Samurai is to achieve financial independence sooner, rather than later. Taking thirty years to pay off a mortgage is not the way. An ARM motivates me to take more action to secure my financial future.
Congrats To All Who Refinanced Or Got A New Mortgage At The Bottom
Refinancing or taking on a mortgage in 2020 or 2021 is one of the all-time great financial moves. It’s hard to see mortgage rates getting back to those levels again.
Whether you got a 30-year fixed-rate mortgage or an adjustable-rate mortgage, feel good knowing you got a historically low rate. The double benefit of living cheaply while experiencing property price appreciation is wonderful.
Although paying off your home might not provide joy long-term, when you finally do, you’ll appreciate that you were able to borrow so cheaply.
Despite an increase in mortgage rates, my preference towards adjustable rate mortgages has not changed. Based on my 20+ years of investing in real estate, I don’t want to pay more money on debt than I have to.
Reader Questions And Answers
Does anybody regret getting an ARM? If so, why? Does anybody regret getting a 30-year fixed-rate mortgage? If so, why? Do you think mortgage rates and inflation will stay elevated in 2027 and beyond?
If you’re looking to refinance or get a better mortgage rate, shop around online at Credible. Credible has multiple lenders who will offer real quotes and compete for your business. Also contact your existing bank to see what it has to offer. If you have good credit, you should get a lower rate than the national averages.
Join 60,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.
Hawaii is an exciting place to call home. It offers incredible weather, scenic views, friendly people, and a slow-paced lifestyle. If you’re lucky enough to live or work in Hawaii, you might be looking for the best banks in the state.
While the Aloha State has fewer banks than other states, there are still plenty of reputable, member FDIC options available to you.
12 Best Banks in Hawaii
To make your search for a bank a bit easier, we’ve done some research and compiled this list of the best banks in Hawaii.
1. First Hawaiian Bank
First Hawaiian Bank, the oldest bank in the state, holds the distinction of having the most branches in Hawaii. This makes it a convenient choice for many people looking to open a checking account, as it provides three different options.
Their first option, Pure Checking, offers a straightforward, fee-free experience, complete with a complimentary debit card. The second, Priority Banking Gold, expands on these features by offering free checks and online bill pay, as well as discounts on loans.
For those seeking the most benefits, the Priority Banking Platinum provides an extensive list of perks, including a credit card with unlimited rewards and cash back, travel points, and no restrictions on redemption dates.
Beyond checking accounts, First Hawaiian Bank also caters to various other personal banking needs. They offer savings accounts, mortgage services, and wealth management solutions, among other things.
2. SoFi
SoFi serves as a top-notch alternative to traditional banking, catering to individuals seeking the convenience and flexibility of online banking. The SoFi Checking & Savings account offers a unique combination of checking account accessibility and high-yield savings account returns in a single, streamlined account.
There is no minimum balance requirement, no monthly fees, and no overdraft fees, positioning SoFi as a cost-effective solution for a broad spectrum of users. There’s also an enticing offer of earning up to $250 with qualifying direct deposits.
One of the most compelling aspects of SoFi is the impressive interest rates it offers. The savings account yields a 4.30% APY, while checking account balances earn 1.20% APY, both rates far outpacing those offered by most traditional banks. What’s more, deposits are insured by the FDIC up to $2 million, providing an added layer of financial security.
With SoFi Checking & Savings, accessing your money is both straightforward and convenient. Over 55,000 Allpoint® Network ATMs across the globe offer fee-free withdrawals, ensuring you can easily access your money whenever you need it.
3. Ally Bank
Ally Bank is an online bank that serves residents in every state, including Hawaii. It’s worth considering if you’re seeking an interest bearing checking account or competitive rates on high yield savings accounts, CDs, and money market accounts.
While deposit accounts are Ally’s bread and butter, the bank also offers mortgages, auto refinancing, and investment products. As an Ally account holder, you won’t have to worry about any monthly fees or minimum opening deposits.
Since Ally is an online-only bank, there are no local branches in Hawaii. Fortunately, it’s part of the Allpoint ATM network that will give you free access to more than 43,000 Allpoint ATMs. If you do use an out-of-network ATM, the bank will reimburse you up to $10 per month.
4. First American Trust
First American Trust operates one branch in Honolulu. If you have a particular interest in wealth planning, it should definitely be on your radar. It provides several wealth planning services, such as financial planning, retirement planning, and estate planning for individuals and families.
Its advisors can also help you set up a trust and protect your greatest assets. Additionally, First American Trust is a great resource if you’d like to build a diversified investment portfolio.
5. Bank of Hawaii
Headquartered in Honolulu, Bank of Hawaii is a regional bank and the second-oldest bank in the state. It serves local communities with a comprehensive suite of products and services as well as sponsorships and volunteerism. The bank’s lineup of personal banking products includes checking accounts, savings accounts, certificates of deposit (CDs), credit cards, personal loans, and insurance.
In addition, it supports small business owners with business deposit accounts, business credit cards, merchant services, and small business loans. The bank also specializes in investment services and long-term financial planning to help you meet your personal finance goals. If you’re interested in Bank of Hawaii, you can chat with a banker online or in-person at a local branch.
6. Central Pacific Bank
Central Pacific Bank has been around since 1954 and has physical locations in Hawaii, Oahu, Maui, and Kauai as well as mobile banking services. It was originally founded to help immigrants build a safe life.
Today, the Hawaii bank offers a wide range of products and services to individuals and small businesses in the Aloha State. Central Pacific Bank stands out for its diverse savings account options, high rates on CDs, and low minimum balance requirements.
It also provides personalized, high quality wealth planning services from a team of wealth advisors. You can download the bank’s mobile app to pay bills, send money through Zelle, check your online statements, set notifications, track your budget, and keep tabs on your financial activity.
7. CIT Bank
CIT Bank is a digital bank with several attractive products for Hawaii residents. Savings Connect is a savings account that offers a competitive interest rate you might not be able to find elsewhere.
Another savings account you may want to consider at CIT Bank is the Savings Builder. While the Savings Builder has a lower annual percentage yield or APY than Savings Connect, it can encourage you to save as you must deposit at least $100 per month from your paycheck or elsewhere to secure the highest APY.
Unlike many brick-and-mortar financial institutions, CIT Bank doesn’t charge monthly maintenance fees, overdraft fees, ATM fees, or excessive transaction fees. You can open a new account and manage it via the online portal or mobile app. If you have any questions or concerns, you can contact phone support on weekdays and Saturdays during select hours.
8. Hawaii National Bank
Hawaii National Bank is a local bank that made its debut in 1960 and has branch locations in Oahu, Maui, and Hilo. It offers several checking accounts, including the Household Checking, Personal Checking, 55+ Checking, Super NOW, and VIP Money Market Deposit. Even though some checking accounts come with monthly fees, the bank may waive them if you maintain a certain balance.
Savings account options include the traditional Personal Savings account with a variable, competitive interest rate, Kids’ Savings account for kids ages 5 to 17, and Christmas Savings account that can help you save for the holiday season.
In addition to checking accounts and savings accounts, you may turn to Hawaii National Bank for personal loans, credit cards, home loans, CDs, and retirement accounts. The bank also serves small business owners with deposit accounts, business loans, and commercial mortgages.
9. American Savings Bank
Known as the third-largest bank in Hawaii, American Savings Bank serves the Aloha State with a wide range of offerings. You can choose from three checking accounts, six savings accounts, and several credit cards with cash back rewards or points. American Savings Bank also offers CDs, student loans, mortgages, and credit cards.
If you open a checking account, you’ll reap the benefits of Overdraft Courtesy, which protects you from overdrafts that may occur from checks and electronic payments. Additionally, the bank’s advisors can assist you with investments and insurance.
If you become an American Savings customer, you may take advantage of online banking, which allows for mobile check deposit, automatic bill pay, Zelle payments, eStatements, and more.
10. Synchrony Bank
Synchrony Bank is an online bank you might want to explore as a Hawaii resident. With Synchrony, you can expect high interest rates on savings accounts and CDs, no monthly fees, a variety of credit card options from popular retailers, and reimbursements for out-of-network ATM access.
If you join the Synchrony Bank Perks Rewards program, you can earn elite status if you meet certain criteria. You’ll reach Diamond status, which is the top level if you deposit more than $250,000 or stay with the bank for five years. This status comes with perks like three free wire transfers per statement cycle and unlimited reimbursements for domestic ATMs.
11. Territorial Savings Bank
Territorial Savings Bank has served Hawaii customers since its inception in 1921. If you open a checking account, you’ll be able to earn interest as long as you deposit $100.
The bank also offers numerous CDs with competitive interest rates, special mortgage rates for first time homeowners, and discounts from local merchants, like hotels, car rental companies, and restaurants.
If you’re a small business owner, you may select from a number of business deposit accounts, business credit cards, and business loans.
12. Finance Factors
Headquartered in Honolulu, Finance Factors has 13 branches throughout the Aloha State. The bank’s deposit products are savings accounts, CDs, and retirement accounts.
It also specializes in a wide range of home loans like conventional mortgages, government-backed mortgages, jumbo mortgages, and investor mortgages. You can stop into a local branch or log into the online portal to manage your account.
Bottom Line
As you can see, there are a variety of banks in the Aloha State. Before you move forward with one, it’s a good idea to weigh the pros and cons of all your options. Factors like your particular banking needs and whether you prefer an online or in-person banking experience will help you make the best choice for your unique situation. Good luck with your search for the best bank in Hawaii.
Frequently Asked Questions
What is the largest bank in Hawaii?
First Hawaiian Bank holds the title as the largest bank in Hawaii, establishing a significant presence with a total of 49 branches scattered across the state. Founded in 1858, it boasts a long history and deep roots in the local community.
Should I choose an online bank or a traditional bank in Hawaii?
An online bank is your best bet if your goal is to land the best interest rate and lowest fees. However, if personalized service is important to you, you’d likely be better off with a traditional bank. Fortunately, most traditional banks offer mobile apps and online portals.
Is a credit union a good option in Hawaii?
If you find a credit union with the ideal loan or the products and services you need and qualify for membership, you may want to join it. But you may find a wider range of offerings at a bank.
Why are there no national banks in Hawaii?
National banks aren’t in the Aloha State due to its small population and the high cost of real estate. Smaller banks are your only option if you live or work in Hawaii. The good news is you’ll find many local banks that offer just as many products and services as big banks.
Oahu is known for its captivating blend of city living conveniences and laid-back island lifestyle. The pristine beaches, majestic mountains, and year-round warmth and sunshine can entice just about anyone to call the Aloha State home. Beyond the natural beauty, Oahu offers something even more special—the Aloha spirit, promoting a culture of kindness, respect, and connection, creating a sense of community that sets Oahu apart.
If you’re thinking about moving to Oahu, HI, or investing in property on the island, it probably comes as no surprise that the housing market is considered to be extremely competitive. With high demand and limited inventory, Honolulu’s luxury neighborhoods like Kahala and Hawaii Loa Ridge especially command premium prices. It’s essential to stay informed about current market conditions, including inventory levels, pricing trends, and buyer demand.
This Redfin article will delve into the 7 essential things to know about moving to Hawaii and buying a luxury home for those looking to relocate to the island.
1. Work with a local real estate agent
If you’re considering moving to Hawaii, it’s essential to develop a relationship with an experienced and local real estate agent. Buying a property in Hawaii presents unique challenges and considerations that may be unfamiliar to those outside the state. An experienced agent who is well-versed in the nuances of the local market can not only provide invaluable guidance and insights, but they’ll likely have an established network of contacts and resources to help expedite the process and ensure a smooth transaction.
If you’re seeking a luxury property, a Redfin Premier Agent will have in-depth knowledge of the luxury segment, including specific neighborhoods, market trends, and property values. There’s so much to know before buying a home in Hawaii, and partnering with a trusted local agent is a crucial step in successfully navigating the market and one of the most unique locations in the world.
2. Explore Oahu’s neighborhoods
Oahu is home to a diverse range of neighborhoods, each with its own unique charm and amenities. From the tranquility of Manoa‘s lush surroundings and the relaxed suburban vibes in Kaimuki, to the laid-back surf culture of North Shore, there’s something for everyone.
Oahu’s luxury real estate market epitomizes upscale coastal living in a coveted island paradise, offering exclusive properties in prestigious neighborhoods, featuring waterfront estates, high-end amenities, and privacy. In areas like Kailua, a budget of $1.5 million may provide opportunities for projects on smaller lots. However, in neighborhoods further from the city, such as Makaha, the same budget could potentially secure a home with ocean views.
The most expensive neighborhoods on Oahu include Diamond Head, Kahala, Hawaii Loa Ridge, and Kailua for single-family homes, while condos in Kaka’ako go for premium prices. These sought-after areas command high prices, often reaching the multimillion-dollar range, due to their proximity to the ocean or stunning views. Properties in these neighborhoods offer luxurious amenities and exceptional quality often featuring high-end appliances and finishes. You’ll also see outdoor living spaces, such as expansive lanais, swimming pools, and beautifully landscaped gardens, allowing residents to fully embrace the island’s tropical climate.
3. Be prepared to pay even more to live in paradise
Oahu’s home prices surpass those in other major U.S. cities due to limited supply of land, desirable location, strong demand from residents and investors, construction costs, and market dynamics. This is especially true for the luxury homes close to the coastline or with scenic views. The state’s strict housing regulations and zoning restrictions further limit the availability of affordable housing options.
In addition, Oahu’s popularity as a tourist destination and its vibrant economy contribute to the high cost of living, including housing. For example, in April 2023, the median sale price in Kailua was about $1,438,000. This amount is over a million dollars more than the median sale price across the U.S.
With all things considered, Oahu still offers an unmatched lifestyle that makes it worth the investment. Living on Oahu means embracing the Aloha spirit, immersing oneself in a vibrant island culture, and enjoying the countless benefits of paradise. It’s important, however, for prospective buyers to be prepared for higher price points and adjust their expectations accordingly.
4. Location, price, condition
On Oahu, location, price, and condition are key factors that significantly influence the real estate market. Location holds immense importance as certain areas, such as those close to beaches, popular neighborhoods, or convenient amenities, are highly sought after. Additionally, the condition of the property plays a crucial role in its value and appeal as well-maintained homes with modern amenities and luxurious upgrades tend to command higher prices. In the competitive Oahu real estate market, finding the right balance between location, price, and condition is key to making a sound investment.
Proximity to the beach impacts price and maintenance costs
In the Oahu real estate market, proximity to the beach has a significant impact on property prices. The closer a property is to the beach, the higher its value tends to be. Luxury beachfront properties are highly sought after due to their prime location and the lifestyle they offer.
However, it’s important to be aware of the maintenance challenges associated with beachfront living. Properties near the beach are exposed to salt air and moisture, which can lead to increased maintenance needs and potential issues like mold. Buyers should consider the additional costs and efforts required to maintain these properties.
5. HARPTA and FIRPTA tax requirements
HARPTA (Hawaii Real Property Tax Act) and FIRPTA (Foreign Investment in Real Property Tax Act) are both withholding tax requirements in Hawaii that affect real estate transactions involving non-resident sellers.
HARPTA applies specifically to Hawaii and requires buyers to withhold 7.25% of the gross sales price as a prepayment of the seller’s potential tax obligations to the state. FIRPTA is a federal law that applies to non-U.S. resident sellers and requires buyers to withhold 15% of the sales price as a prepayment of the seller’s potential tax obligations to the IRS. Both aim to collect taxes owed by non-resident sellers upfront during the transaction process.
The withheld funds are then applied towards the seller’s potential tax obligations. It’s important for buyers and sellers to understand these withholding requirements and consult with tax professionals to ensure compliance and proper handling of these taxes during the transaction.
6. Learn about short term rental regulations and policies
Oahu’s consistent increase in home prices, robust economy, and high housing demand make it an attractive investment option. The demand for short-term rentals, common in areas like Waikiki, Ko’olina, and Turtle Bay on North Shore, contribute to the growth of the luxury real estate market and offer opportunities for income generation.
However, the City and County of Honolulu are implementing regulations to restrict short-term rentals to a minimum duration of 90 days, addressing concerns about housing availability and affordability for local residents. Hawaii’s local statutes also prioritize owner occupancy, offering property tax exemptions to homeowners who live in their primary residences. These exemptions financially benefit homeowners and promote stable communities.
Airbnb and VRBO properties are subject to certain regulations and restrictions
In most residential neighborhoods on the island, these short-term vacation rentals are not permitted or allowed without proper certification. The City and County of Honolulu has implemented laws and regulations to control and manage the operation of these rental properties in an effort to balance the needs of residents and maintain the character of residential neighborhoods.
Hosts must obtain the appropriate permits and certifications, such as a Transient Vacation Rental (TVR) or Bed and Breakfast (B&B) license. These licenses require meeting specific criteria, including compliance with zoning regulations, safety standards, and tax obligations. It is important for hosts to research and understand the requirements and limitations in their specific area before offering their property as a short-term rental.
7. Moving to Hawaii with pets? Expect to quarantine them
When bringing pets to Hawaii, strict regulations aim to prevent the introduction of non-native diseases. All pets must undergo a mandatory quarantine period when moving to Hawaii to help prevent the introduction and spread of rabies. Hawaii is a rabies-free state, and the strict regulations are in place to maintain this status.
There are a few pet quarantine options you can choose from, including a 120-day quarantine in a designated facility, and a “5-Day-or-Less” program for a shorter quarantine. It’s essential to thoroughly research these options in advance and ensure that your pet meets the specific conditions, such as health requirements and permits, associated with your chosen option. It’s important to begin the quarantine process early, seek guidance from the Hawaii Department of Agriculture or a pet relocation service, and ensure compliance with all regulations for a smooth transition.
Navigating Oahu’s luxury real estate market successfully requires an understanding of these nuances and working with experienced local real estate professionals who can provide insights and guidance. They can help buyers navigate the complexities, identify suitable properties, and negotiate competitive offers. Aloha!
VA loans are a great mortgage option for many military families. We launched the MilitaryVALoan.com Show with our guest host Bernard Edwards to learn from real estate professionals that serve veterans and their families about what it’s like to use a VA loan when purchasing or refinancing a home.
In this episode, Bernard Edwards speaks with real estate professional Chad Vasquez who shares some of the lesser known details about home buying with a VA loan.
Get started on your home buying goals today.
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>>View first episode: Bernard Edwards interviews VA loan consultant William Doom
A VA loan requires no down payment, but you will be charged a VA funding fee.
“With the VA loan, many know one of the benefits is that it requires no money down,” says Vasquez, “but, what surprises them is being charged the VA funding fee.”
A VA funding fee is a one-time, upfront payment required for all VA home loans. This fee helps sustain the program as it is self-funded and doesn’t use taxpayer dollars or other VA program funding. Your funding fee will be determined by the loan amount, your service history, including length and time of service, and the type of loan. Funding fees vary from 0 to 3.3 percent of the loan.
Vasquez also notes: “The good news is that the amount can be added to your loan, so the fee isn’t out of pocket.”
>>Related: 2018 VA Funding Fee Chart
Appraisals may be harder to get for VA loans than conventional loans.
“The VA appraiser is going to make sure that the property is in a certain condition — it can’t have a hole in the roof or extreme peeling paint. This is to protect the veteran and ensure they’re purchasing something of good quality,” says Vasquez.
“The most unique thing I’ve seen required for a VA loan is that the door between the garage and kitchen must be a fire-rated door. This isn’t required for other home loans, but it’s a good safety feature.”
Edwards adds: “For some, it may seem that VA appraisals are a bit harder to pass, but that’s actually great for you as a homeowner. It’s extra assurance of what you’re purchasing that other loan types don’t give.”
Get started on your home buying goals today.
Bernard A. Edwards, the host of “The MilitaryVAloan.com Show” is the founder of Troops To Agents, which empowers veterans and spouses to become successful real estate professionals. He also is launching The Military Transition Camp, dedicated to helping military members design every aspect of their post-uniform life: mindset, health, purpose, career, money, fitness, emotion, relationships, and spiritual growth. Follow him on LinkedIn or Instagram for behind the scenes footage and insights from his interviews and travels. Service history: Technical Sergeant (E-6) Retired; 16 years of service; U.S. Air Force.
FULL VIDEO TRANSCRIPT:
Bernard Edwards: Hey everybody. It is the Military VA Loan Show and I’m here with none other than Chad Vasquez. We’re going to talk a little bit about real estate, about VA loans, and on this show, how we always do, about becoming a homeowner with your military VA loan. Chad, you’ve been in real estate working for how many years now?
Chad Vasquez: Coming up on three years in Hawaii, so I’ve got a little bit of knowledge on how things go here on the island.
Bernard: What was the first year, besides when you had your actual license, when you experienced using a VA loan?
Chad: Using VA loans to buy my first home was in Texas. Then, I actually came to Hawaii and started doing real estate. It’s a little different here, but using your VA loan is an incredible opportunity.
Bernard: Nice. When you first used it in Texas, you weren’t working in the business as much at
that time. You knew that you wanted to get into real estate, you wanted to be able to
invest. What was that experience like? What were some of the surprises that you had?
Chad: That’s a great question. With the VA loan everyone knows some of the benefits are that it’s no money down. That’s one of the fantastic things. One of the surprises in the VA loan is there’s actually a VA funding fee. That’s something that everyone pays so that the Veteran’s Affairs can actually insure those no money down home loans. It can be around 1.5% the first time. It actually goes up each time you use the VA loan. The good news is that actual amount gets put into your loan, so it’s also not out of pocket.
Bernard: Nice.
Chad: But that was a surprise.
Bernard: Nice. Yeah, and one thing that Chad just mentioned is that a lot of people get it, they have this idea that the VA is the one that’s actually giving you the loan, but the VA is actually insuring the loan and with that we don’t have to pay private mortgage insurance, which is something that’s common in the civilian sector.
Chad: Correct.
Bernard: And another thing that we’re able to save money each month. You’ve had quite a few clients, tons of clients each year that have that military background. For them, what’s the process been like as far as obtaining their VA loan?
Chad: Really good question. Usually we either talk to them first or a VA qualified lender does, but either way talking to a real estate agent to get some good advice. We’re always going to give you information, the knowledge that we have about the local housing market, so you can make the best choices for you and your family. That’s the most important. Equally to talking to a real estate agent, is talking to a good knowledgeable VA lender — somebody who does a lot of VA loans, somebody who can help you with that process.
Bernard: Yeah, it’s definitely, there’s some unique things to all different types of loans out there, conventional loans, FHA loans, VA loans, and you do, like Chad’s saying, you do want to have somebody that specializes in that, that’s shown proven success in your particular market because each market could be a little bit different. I mean here on island we have kind of different pockets of the island, and even the way that things might work on one corner of the island versus another may be a little bit different and you do want to work with someone who’s really versed. What are some of the unique things, say, when it comes to home inspections and appraisals that you’ve seen with the VA loan?
Chad: Nice. So here when the VA or Veteran’s Affair appraiser comes out to make sure the value of the home is equal to the size of the loan you’re getting, they’re going to make sure that the property is in a certain condition. That means it can’t have like a hole in the roof, it can’t be having really bad peeling paint, things like that they’re going to hit on the inspection just to make sure the veteran is protected, they’re getting something of a good quality. Some of the unique things we’ve seen is, for example, the door between the garage and the kitchen has to be a fire rated door for the VA. It doesn’t have to be for other home loans, but that’s a good safety feature as well.
Bernard: Great. That’s one thing I’ve noticed is that, yes, for some people they may seem that the VA appraisals and inspections are a little more harder to pass, but that’s great for you as a homeowner ,because that’s extra assurance that you’re getting versus one of these other loans that doesn’t do all that policing for you. You have to go out and find and add these things, whereas the VA loan process they’re really having your back and ensuring that that property that you’re going to get is an investment. There might be some minor things, carpet, cosmetic type things that aren’t able to pass, but really big items that are knocking down the value of your property, those things are not going to pass. That’s the VA having your back.
Chad: Yup.
Bernard: Now, for you, I get to interview real estate professionals from all walks of life, and one of the awesome things about you, you’re a veteran and you’re currently serving in the Guard. Can you tell us a little bit about your military career from active duty to now what you’re doing?
Chad: Absolutely. I was active duty Marine Corps infantry back in 2000 when I joined the first time. After I got out there was a break in service. When we moved back here to the island of Oahu in Hawaii there are all five military branches here, so I actually wanted to go back and do reserve time. So I’m now currently in the United States Air Force Reserve. That helps a lot too because I actually can keep a pulse on things that are changing with the military. There’s things that have changed even in the last 10 years that weren’t the same when I got out.
Bernard: That’s awesome. Well, Chad thank you so much for stopping by.
Chad: My pleasure.
Bernard: Thank you for your service. Check us out on militaryvaloan.com where we’ll be coming at you with more questions and answers.
