The economy is slowly recovering from recent lows, but despite spikes in Maui home sales this year, prices remain incredibly affordable. If you are still managing your finances with caution, here are a few tips about purchasing Maui real estate, particularly with regard to what you should be able to afford.
1. Money now and money over time. When planning to own real estate, you have to keep both the down payment and also the long-term cost over the duration of the loan in mind. This is where excellent job security comes in handy.
2. What is your upper limit? The standard method to determine the most you could afford is to multiply your current annual household income by four, assuming you can make a down payment of 20%.
3. Down payment. Generally, you will need to pay 10% up front or more. If you don’t have that much saved, you will probably not be able to secure a loan.
4. Likewise, the bigger your down payment, the more loan options you should have. Lenders that know you have a large sum of money that you can put in right off the bat are going to be much more eager to offer you a loan than if you only have a small amount to start with.
5. Debt is a detriment. Lenders are more cautious than ever in their judgment of worthy loan candidates. If you have any substantial debt to contend with, lenders will assume that your monthly financial obligations will damage your ability to make payments, thus making them reluctant to offer you a loan at all.
6. Making money off your property. One way to make your real estate investment more affordable is to purchase a property with units that you can rent out, as with a duplex or cottage. The rent you collect can go straight into paying off the mortgage. This will be considered by lenders in the process of obtaining a loan.
In the market for Maui real estate? Have a look at new Maui property listings to keep up with what’s just gone on the market. We also recommend a look at our Maui real estate listings. You also might like to check out what’s available in the Wailea Golf Estates. If you have any questions or need assistance, you can find our contact information at the bottom of the page. Mahalo for reading this week!