Sign Hawaii Profit Sharing Agreement Template Myself

Document type sign profit sharing agreement template hawaii myself

aloha guys i'm here with jimmy allen i'm going to be printing out a little bit this music down i'm here with jimmy allen it is a pleasure to have you here jimmy thank you we get a lot of questions for people that are wanting to buy a home here in hawaii and they don't know how to do it so bro you guys the expert on lending uh jimmy you've been doing this for how many years um over 30 years now just starting just 30 years 30 years and he is the following my mom and dad's footsteps in real estate so jimmy is going to be sharing with you guys his background but primarily if you haven't already because we're going to be posting this um interview in facebook and on youtube also but for youtube uh people that are watching go ahead and follow us on facebook the name of the facebook group is i'm moving to the big island of hawaii feel free to join it's free and hey we got a couple of hearts likes aloha guys aloha and and so thank you so so much for being here and for watching this beautiful interview so jimmy take it away share all of your knowledge to the people in your background what do you do who do you work with and just a little bit about yourself happy law friday everybody my name is jimmy allen i am with guaranteed rate i've been in the mortgage business for over 30 years um i started i'm not going to say what year but it's you know a long time ago i started visiting i started as a real estate appraiser i was doing appraisals in santa cruz county trying to go to college and both my parents were in real estate my mom's been a was a broker here they bought kahana realty uh conor moca realty and um when i was in college what was a parent that's in real estate say to their son why don't you look at going into real estate and then getting a job and selling real estate and ben lomond boulder creek and felton in santa cruz california ended up coming back to hawaii and working for bank of hawaii as an appraiser and drove around the island appraising properties and then ended up getting into lending what's the best best thing i did was was getting was stopping to being an appraiser and became a lender but it's been a very rewarding career and been doing it for so long that it's second nature i'm here to spread some of my knowledge about the real estate business and real estate lending we are very lucky to have jimmy here and i'm so sorry you guys i'm looking down because i'm just sharing this interview with uh the other pages that we have up um but we are so blessed and happy that um jamie is here with us answering all of the um the questions that we get almost on a daily basis on how to get finance here in hawaii and thank you for sharing your your beautiful resume because um you know it starts at home like jimmy has like this solid foundation that not a whole lot of local lenders have um you know the fact that you know your family was in real estate and development and lending and all that and it's you he brings in like the whole spectrum right you got it all jamie so you know he's he's very very smart i uh refer a lot of a lot of my clients your way and they're very happy and we're getting a lot of hearts in in in thumbs up and so thank you so much guys so without further ado we're going to go right into the lending questions so what type of loans do you have available jimmy we have all types of loans from first-time home buyers to jumbo financing or non-conforming loans high-end loans but i said the ones that i like to do are first-time homebuyers yeah because they're a little bit more rewarding to get somebody into their first home but the programs that we have we we do conventional loans which is your standard 30-year fixed um and then we have non-conforming loans which is your jumbo loan and in hawaii a jumbo loan is loan amounts above 822 000 and a conforming loan is below 822 000. and we have fha loans va loans usda loans both fha requires three and a half percent down va is 100 financing if you're a veteran and um usda will also do 100 financing in limited areas um it has to be a more rural in area like hilo the proper area the city of hilo or the county of hilo it's not a city but the area of hilo is considered to be an area that you can't do a usda loan in but kailua kona you can and it's based on the total population of those those um districts or those areas you know that that's great that you say that because sometimes people um they're approved for usda and they think that they approve for the entire island and sometimes it is most of the island it is most but yeah but again it's surprising that in hilo it's not available right when you're in the city or the area of hilo that's not a city but um yeah but if you go out outside of hilo it is available in pretty much anywhere else on ireland um and the thing about a usda is 100 financing um but the there has inc there's income restrictions with the usda law and because they're doing 100 financing the debt to income ratios which is how much income you have versus how much debt you have are lower and it makes a little bit higher harder to qualify for a home using the usda yep oh thank you thank you guys um so um now what are the um the most popular loans well the most popular loan is a 30-year fix because it's satin is consistent and your payments never change is that the best loan it's going to depend on your situation um a 30-year fixed rate if you're not going to leave you're going to live there forever you buy your your primary residence and you know you're not going to sell you're going to stay there um it's probably the better loan for you but if you're buying a first time home and you're going to stay there for five seven ten years there are arms or adjustable rate mortgages that are fixed for five seven or ten year periods they don't change they don't adjust during those periods and it doesn't make sense to pay more for a 30-year fixed if you're not going to stay there longer but there's a lot of people are afraid of the arms and there's a bad connotation around the orange because there were a lot of arms that were bad um and they no longer they really are no longer in the marketplace so most of the arms are going to be like i said fixed for five years nothing changes and then it'll adjust after the fifth year um or you can have it for a longer period seven or ten years and then when you get into an armed situation you can also refinance you can well you can suppose always refinance yeah it's never a guarantee to refinance because the market changes um one of the problems that we had when the market was very difficult for people is that the values of properties went down so much that and they had arms that were adjusting and they couldn't refinance and they couldn't sell so and it was never good to say that you can always refinance because it just depends on the market but you want to be able if you do do an arm you want to be able to know that you're going to be able to make that payment after it starts to adjust and the other thing about an arm is that as time goes by hopefully and most of the times your income is going to be increasing as well so if the payments do adjust you'd be able to afford that but if the goal is to sell within five seven or ten years then you would go ahead and do that if you're nervous about that then obviously the 30-year fixed rate is going to be better and you know what and that's what that's where we can come in to assess you know sometimes people want to um look for a property and stay there for the next you know three years or so and so you know if you didn't have anybody that could fully explain you know like what will be your best options and each each situation is going to be different for each individual exactly and it's hard to make a blanket statement i think a lot of people go i do nothing but a 30-year fixed rate well that ends up could be worse for you because if rates go lower if you're in an army rates can also adjust down they don't always adjust up yeah and you know right now we're in a very low interest rate environment um and there's not that much bigger there's not that much of a difference in arms versus a fixed rates right now so it would be it would be um pretty good to um probably haven't have an arm right okay um derrick he's asking i don't know if you guys can see it on the screen uh is there a cap for the interest rate adjustment yes most arms um it's a variety of different products but majority of them are are fixed for five years as i said and then there's a cap of how much you go up annually and for the life of the loan and it varies from two percent to um for annually i mean sorry for two percent um yearly and up to five six percent for the life of the loan so if you had an adjustable rate mortgage at two and three eighths um and it's a five year and over a five year period the maximum that could go up to would be seven and three eighths but it wouldn't adjust until after the fifth year and then in the fifth year it could only go up two percent or whatever that cap was for the annual and then over the life alone would be the the five percent okay thank you so much for um answering that question um now moving on um what are the benefits of working with a local lender and i think the main benefit is just the knowledge of the real estate market yeah and i kind of think of that if i could do loans all over the country i don't do it because you know i don't want to go into a place i'm not familiar with and come across something that's going to cause problems in hawaii in hawaii one of the things is with condominiums and in hawaii condos are not a condo or not a condo because there are changes and condos here a lot of them are run like hotels where you can check in hotels and so a mainland lender may not realize that that's a condo they think they can do and at the end of the deal they can't because they can't get it approved to be sold to the secondary market which is fannie mae and freddie mac and most loans are sold to the secondary market and that's a reason to have a local lender that's going to have that knowledge yeah and you know what i do have this conversation very very frequently uh people that are asking um you know they have the their their friend who's a mortgage broker on the mainland for years and they've done you know several transactions with this person and it's kind of hard for them to like move away from um you know they're their mortgage broker um but this is where uh we need a local lender you know and especially for condominiums like well i like to think it too is being a local lender if you know the agent your referral source of you yeah are sending me a client and yeah i don't do well i mean you can always go knock on my door at my office and visit me in person lender you you're talking on a phone you're gonna get transferred all over who knows when you ever actually get in front of the person that's doing your loan but um you know obviously i want to do a good job for um molly and for the local real estate agents so um i'm going to work hard to do that yes and you know what and he's uh and not because you're here but he's very responsive he really takes care of of the people that i work with and oh you got a lot of hearts right now you really take care pride of your of your of your job and uh but yeah it is it is just great to have somebody local that understands you know what are the requirements what are the down payments and oh let's talk about the down payments on condos that is like yeah there's a there's there's a lot of well the variety will we can talk about down payments in general in general yeah so um down payments on a conventional loan like i said earlier you can have some that are 100 financing which is the va usda um an fha is three and a half percent as a down payment but the fha has loan limits and then hawaii the limits are set by the whole county so it's you're taking the west side and the east side together and so that that loan limit is a little lower and then conventional loans you can do with five percent down um anything under 20 down on a conventional loan requires mortgage insurance um the va doesn't have mortgage insurance and that's one of the benefits of the va loan fha will have mortgage insurance and usda has mortgage insurance as well it's a little bit less than your conventional and fha and mortgage insurance is basically when you're not putting a 20 down payment if you're ensuring that the mortgage insurance is to insure the lender for that equity position that they're not going to have because you don't have the down payment and if you think about if you put five percent down and you miss a few payments that's going to pretty much take care of your equity rather quickly yeah and that's what that mortgage insurance would come in so it's if bad things happen but the mortgage insurance is is good because if you you're trying to save for that down payment and as you know real estate continues to rise you're kind of running in place because the more you save and the longer it takes to save as prices increase um you'll have a harder time to get in and there's there's different opinions you know some people say you should never buy a house with 20 down if that was the case i would never ever bought my first home right so the low down payments is a good thing yeah yeah that's that's that's great advice on the down payments um so now um how can people qualify for a loan call jake and call me yeah well the best thing to do is to qualify is to do an application with a lender that you trust and start the pre-approval process before you go out and look at real estate because the last thing you want to do is you go out and find your dream home and then you go and okay i want to qualify and then you don't qualify and now you go back and you qualify for you know you're looking at five six seven hundred thousand and now you only qualify three four hundred thousand yeah it's really gonna be harder to find something that you like because all the ones that you like cost more yeah so best thing to do is to get pre-approved and uh and you know the pre-approval process is fairly easy um everybody has online applications they have an online application you can go to and we will pool credit we'll run your credit to determine where your credit scores are and then we'll verify what your income and what your assets are and it runs through an automated underwriting system and it provides a decision and that decision as long as we can verify the information that you provided um you know your your income your assets um and then pretty much it's you know we should be able to do that long okay um now can um okay so that's that answers that do you have to be employed in hawaii to qualify no you don't have to be employed in hawaii but if you are if you are employed um in california you have to be able to work in hawaii being employed in california and the thing that has changed obviously with with kovid is that more and more people are working remotely yes and it's becoming more and more acceptable to work remotely um before when we do this it was harder it was harder to explain to people that i'm working from home i'm living in hawaii but i work in california yeah um and most of the time they would think well if you live in california and you work in california you can't be in hawaii and qualify that's that's no longer true so you can you can live anywhere really as long as you have the ability to work remotely and your employment or your employer will let you work remotely the hard part if you're self-employed and you moved to hawaii even though you had all your clients in your business in california and you're doing the same thing in hawaii it's a little bit harder because we have no way of knowing that you'll be able to do the same business moving here and setting up new clientele and having a new business so that's a little bit harder when you're trying to buy a home and you're self-employed and you're moving to hawaii plus you're moving your business to hawaii you know what i think the people that struggle the most uh people that are self-employed that have uh say for example electricians right that have to transfer their whole license over to hawaii and wait for that time period to pass um i think those are like the ones that have like a little bit of the harder time um but yeah to your point um but to start qualifying and the best thing is to do is to sit down and i do this all the time yeah and consult and and determine what your situation is um you do have to have a job yes please you need to keep that job through closing because they're closing before we close and we do verify that you're still employed yes um and then you want to have your down payment saved if you're doing anything with a down payment and you want to have that money seasoned in a bank because he has an explained season so you can't we like to call mattress money match with money so there's no way for us and we have to verify where your down payment comes from yeah whether it's borrowed gifted and it can be gifted borrowed it has to be barred against other real estate but if you have it in your mattress there's no way for us to verify it but if you get it into a bank and it's seasoned in the bank for a couple of months and we can verify that then we can use it so all those people that have mattress money not good if you want to buy it or you want to buy a house and uh other thing if you're self-employed you want to report your income because we're going to only qualify you on the income that you report to the irs and uh it's just unfortunate that's the way it is a lot of people come in and i'll look at their tax returns and they say i make more money than that well no you don't because if you don't have it reported we can't use it wow or people that have like really high car payments right those are that's one that we have come across car payments car payments student loans student loans yeah those are things any type of debt that you have is going to make you qualify for less so ideally it's to have little debt don't buy a brand new car buy the house first then buy the car um because the car payments the car payment will keep you from qualifying yep once you have the house they'll lend you the money for the car right you know how getting a house getting a home loan is going to be a little bit different and we have to factor in that you know crazy 800 a month payment that 800 a month payment can quality for about 150 000 dollars good in that tundra no home no i'd much rather have the guy pull up in the old jugi than the brand new lexus so that's great like get it get home first and then the car if you can right but that's that's great advice um uh let's see um well in escrow what are the big no-nos that people should not do while we are in escrow go buy furniture buy a new car incur any type of debt you really don't want to do that while you're in escrow yeah change jobs lose your job lose your job and then don't tell anybody about it you know when you if you lose your job you know that can happen but we when we approve you for the loan we're going to prove it based on the job and the income that you have and the assets that you have and if we get to the end and that's changed your financial situation is changing we may not no longer be able to make you that loan yeah so it's important to keep things the same as you go through escrow yeah and you know if you do change jobs we see that can work but you need to let you know let us know that that's happened so we can make sure that we can plan for it yeah and um and accommodate it and hopefully if you're changing jobs you're changing jobs for more income yeah yeah that's exactly because if you do have that change of a job and it drops significantly to where you were making before it just you can we cannot work a magic wand and make that disappear right so that's very important um what happens um what is the minimum credit score required it varies by loan so um a conventional loan is um and there are some variation of this but most of the industry is 620. so it's not that you have to have perfect credit to get a how to get a loan um fha and va and usda will go to a little bit lower of credit scores um but 600 is probably the minimum score yeah and your credit score is going to affect the rate that you get and it will affect qualifying as well okay so pay your bills on time yes that's one of the things that you need to try to do and um you know and everybody has challenges in life but if you if if you do it doesn't mean that you can't get a loan but it will affect your ability to qualify and the goal is to try to get to where you have a decent credit score because it's going to be so important because that's what the rate is going to be based off of right and then if you do have a delinquency or or a problem just try to you know work it out with the with the institution send out the letters um or um you know what other what other thing people do to well you don't fix that no you can you know a lot of people do this and it's easy to you ignore it so you have you have something you don't pay and you just let it go yeah and then you know that'll come back in three four years when you go ahead and it's still going to be there yeah they're still going to be trying to collect the money that you know yeah and that's not a good thing for applying for a house and we look at your credit and they look at things that are 30 days late 60 days late 90 days late if you have 90 day late 60 day lates and you have multiple of those it's going to be really hard to get along yeah and if you if you have a house and you miss a mortgage payment recently when you apply that almost almost always keep you from buying that second house or that investment property so maintaining a good credit is really good um and i know it's easier said than done like everybody just pay your bills on time but life happens you know what happens but you know at least you have to get out of it and just try to resolve it at least if you want to make things happen and so there are things when people there are people that have had to file bankruptcy or been foreclosed on or have done short sales that doesn't mean that you'll never be able to buy a house again um it just means it'll have to have some time you have to reestablish credit and it varies um based on the reason that you had the foreclosure or you had the bankruptcy now if you had medical issues and something happened you lose your job because of that you know that's going to be something they're going to look at and the time to wait is going to be less now if you just whatever you just bought all these things and you know you know you can't pay it and it's just there's no what we call financial mismanagement and you do a bankruptcy or foreclosure it'll be seven years versus three years yeah and that varies also on certain loan products and fha is a little bit more lenient on that waiting period but those in general um that you need to wait and get your credit established again that's that's a lot and then when you are and the thing is that when you're working on you know getting your credit scores if you had some struggles and and you're starting to work and you're starting to get the scores back up what you don't want to do is miss a payment because once you miss when you have challenges with credit and then you miss a payment it's going to really just kind of pummel your scores because you're already struggling and that's the way they look at it too the other thing with credit scores if you have three accounts and you pay two of those bad i mean that's you know seventy percent sixty-six percent of your accounts that you don't pay is agreed so it does it does benefit you to have more accounts and pay those accounts on time but if you have you know 15 trade lines and you miss one payment yeah that's not going to be as bad but again if you have two or three and you have late payments that will make it really difficult on the scores and i think uh and to your point um a lot of the people that are looking to buy um whenever they get together with jimmy right well i'll just say with him he always advises people on a path you know he's just not like you know what i cannot qualify you and goodbye you know like he says hey you know what this is a plan of action i'll see you in in the next couple of months and then um then we can come back and revisit but people they have to do the work right i mean it's a process it's a process and sometimes people that want to come in and get qualified to buy their home it may not be right when you sit down for the first time yeah so like you say there's a process that we go through and make a plan of what you need to do and it may be reducing your debt it may be um saving more for the down payment yeah um and make the plan or if you're self-employed it may just be waiting you know another year to have the proof of the self-employment that you're doing so that we can qualify you yeah yeah i think um but the worst but the worst thing you can do if you are thinking about buying a house is not talk to a lender about it not come and talk to me about it because i know it's challenging you don't know but uh it is something that you can achieve but if you never do it you'll never know exactly and some people are surprised and there are programs you don't need 100 you don't need down a down payment there are programs that will allow you to qualify without a down payment you don't need perfect credit yeah you know so but if you don't know what you qualify for it makes it a little bit harder and i don't think molly wants to be a travel guide and take everybody around and have them ride in your car and then you come in they can't qualify and that's what i tell people and that's what i tell my clients um you know we need to know like what if what if you go to this beautiful home and you want to write an offer offering we can't right so there's like truly no point you know they have to be qualified they know they need to know where they stand um in and you know they have they have to have a better grasp on their finances and primarily what i hammer on on my side making sure that you can meet your monthly payment because at the least you want to do is getting to a situation where you're really struggling to make the monthly payments and that's something that i don't you know i don't advise or um and that happens a lot where people yeah you know just because we can qualify you yeah for a four hundred thousand dollars or a million dollar home yeah but that doesn't mean that that's what you want to pay right exactly whatever you qualify you want to be comfortable with what you're paying exactly um and that just depends from situation to situation yeah well thank you oh chase um uh jimmy he wants to talk to you sure about love you yeah uh he'll connect with you chase um okay so oh let's talk about our favorite topic here lending a lot of zone one let's talk about it [Laughter] landing on zone one they're it so lava zones one and two for the people that are not familiar with hawaii um there are lava zones and basically lava zone two is any area that's below the volcano rift zone yeah and then um so there's a risk of the volcano erupting and then running down that rift zone and covering your property lava zone two is less risk less risk yeah and then lava zone one you're actually in the rift zone you're actually the love is actually erupting in your subdivision at leilani estates in hilo that happened it literally the eruption happened in that song so um and there are there's still you know we will lend in lava zone one on a very very limited basis and you have to be able to get insurance and the insurance is very difficult and they're it'll be just case by case like you're not going to get lava you're not going to get a lava insurance in leilani estates what about all the new construction that is popping up in leilani states you know if they're building without that they're building it without financing you know that's their risk that they want to take yeah that's cash you know it's cash right so that's a possibility um but you know what happened to a lot of people not saying that'll happen again but you don't know we don't know it was a surprise i mean i've never you know living here all my life and watching the volcano and having it you know erupt all where where it has and when that started erupting even i thought well it's just gonna erupt a little bit a little bit it took an entire neighborhood yeah that erupted quite a bit yeah it's very scary so it is scary and there is risk um but people people like to live on the water yeah there's a risk of living on the water yeah lava is a little different lava is a little different because it lava covers it's hard to build back over that yeah well you know i think that um and and i said it on a previous interview i think you have to be at peace with your money right yeah you know if if you're if you are okay with losing it you know then and there's you know lava zone two and people think still think this is gonna be on the hilo side on the east side yeah but lava zone 2 will actually start at um the um city of refuge road honor now yeah and we'll go all the way to past ocean view and that's going to be all lava zone 2 because the lava for kona paradise that was in 1950 wow which is not that long ago for lava you know so um so those would be all those areas are still lavazone too and that's from my law mana law well um yeah i mean if you if you are really adamant on getting um insur um a loan for lava for lava zone one contact jimmy know but it's like like he said it's very difficult to to uh to make things happen down there and i personally would not advise anybody to get into lava zone one um but you know like i said you know if if you are at peace with your money and you and you want to pay it cash or you're really wanting to get creative and need assistance uh perhaps you know jimmy has uh somebody that can assist but it's a it's very very very challenging and very difficult so what happens right because of the lava zones obviously the property is going to be less expensive yeah so it'll be more affordable for people yeah it's just one of those things right it's like it's affordable but it's in lava zone one right so in in there's new construction happening in in leilani right and the houses are gorgeous yeah they're really beautiful but you know they're in danger zone so just be careful um how much money do i need for a down payment this is another question that we get very often so again there are 100 financing programs yeah through usda um va which you have to be a veteran um so conventional loans you can do with as little as as three percent fha is three and a half percent anything less than 20 requires more insurance but there are loans that are available with less money down with less money down so you don't need the traditional 20 that everybody says that you have to have when you go out or the the myth is that you have to have a 20 down payment to buy a house and that's just not true okay we said will my down payment vary based on the loan on the loan that i chose yes whether you're conventional or usda or va so it's not a strict it's not well there's just like different products different products different okay different interest rates but for the majority of people you know there are there are quite a few veterans and you have the benefit of a hundred percent financing yeah and uh um but the usda loans are a little bit more limited in geographically also there's income restrictions on usda um and then the conventional loans with three and five percent down are pretty pretty often that we're doing uh five percent five percent down is probably the most um um probably prevalent of the down payments that i work with three percent you can do you can do three percent down but then it's your credit has to be better because you're putting less money down yeah yeah okay so we're going to move on to another question here what is the interest rate in the annual percentage apr okay this is a little harder to explain but the interest rate the interest rate is what the rate that you will make your mortgage payment on so if your rates at three percent um the payment will be calculated at three percent interest rate the apr factors in the cost of the loan over the life of the loan so if you're paying mortgage insurance that's going to be a cost over the life of the loan if you pay points to buy your rate lower that's the cost of the loan and all those costs are calculated over the life of the loan and that will be the annual percentage rate mm-hmm awesome so that is so it's a true cost of the money and when you shop for loans that's really the best rate to compare because the annual percentage rate should be the rate that you that's going to show you what the total cost of so a three percent rate may sound really good but if your apr is three and a half that means that you're paying points and it may not be the best rate gotcha so what is the difference between locking a rate or floating a rate well you have a ability once you enter into a contract you have the ability to lock the rate lock in you can lock it for various time periods 30 45 60 days but you have to close on the loan within those lock periods and what blocking the rate does it protects you if the rates go up you're locked in and your rate won't change um if you float the rate and another thing when you lock the rate it's protected from going up but you can't float it to go lower if rates go lower you can't you don't get both the best of both worlds right so if you're floating the rate it goes up or down you you have that risk so if you are comfortable watching the stock market go up and down and you don't care watching your money lose or gain so that's a kind of a judgment of how i ask people how comfortable they are if it makes you nervous you lock the rate just lock it yeah and right now where interest rates um you know every and it's out there that rates are at their all-time lows right but the last couple of weeks rates have taken a turn for the they're going up and they've probably gone up about five eighths of a percent in the last three to four weeks um and there's a lot of volatility in the market and i think that there's more um risks for rates to go up so if you do find something you might want to lock it in just suck it in already yep yep and the fact that we're struggling with inventory as well it's just it's not a combo and you're talking about rates were at two and three quarters and now they're at three and a quarter i mean those are still rates at all-time lows right you know so yeah it's still a good it's still a good buyer prepared exactly you're right but we all want the deal right we all want like the really nice rate but yeah to your point they're going up and um okay so uh what will my closing costs be uh are they part of my loan or will i pay them in cash at closing so your closing costs are in addition to your down payment and the way to look at it the loans that cost more it costs more because you're using some other money to buy the interest rate lower and they're called points um so if you have a rate at uh three and a quarter without any points on a point is one percent of your loan amount so if you wanted to buy that rate down from three and a quarter to three it may cost you a point and that point you'd pay for at closing so on three hundred thousand dollar loan if you paid a point it would be three thousand dollars and so you'd have to have that in addition to your down payment and there's other fees involved in the real estate transaction appraisal fees escrow title recording fees home inspections um termite inspections so there's a variety of different fees general rule two three percent of your purchase price and closing costs yeah that's a great rule of thumb you know because we do get um asked that very often um how can i get this and just on the tell me so on the closing costs so the seller can actually pay the closing cost it's a little harder in this market yeah but if you if you're limited on your down payment say you only have five percent so you can ask for closing costs and a lot of times what we'll do is if the property is listed for sale for 350 and you need money for your closing costs you offer 355. and they give you 5 000 in credit and you use that towards your creating costs golden nugget right there it's harder in this market that's very harder and that's another thing that when you're out there and you're looking you know you it's a must to get pre-approved yeah because nobody's going to take an offer that you don't have approval with nope and um i know that agents have said this over years and years and years no there's there's offers coming in you got to make your offer and maybe that wasn't as true but now now it is true there are multiple offers on properties all the time because there's just not enough inventory yeah probably partly due to lower interest rates partly that people want to move to hawaii and uh it's a good place to live cheese that is sold you're like offers are flying in yep it's it's it's um it's hard it's harder when you're buying so like when molly tells you you got to make an offer on something even if she's telling you don't you people are buying the properties without even looking at them yeah there's a lot of sight unseen now and you always can build in your contingencies for your inspections that will allow you to get out of the contract but that's happening more and more where people are just writing offers without seeing them and you know and for for folks that you know they're in their 50s 60s they cannot believe that people are buying sign unseen like they cannot you know like clients that i yeah they're like oh my goodness they're like is this really happening is this a market that we're living in and that sets the reality or they'll be i never pay full price right never pay for it and that's you know what everything said there's always it just depends on the market and right now it's you know it's a seller's market it is a seller's market you know if it's nice and it's good and it's priced right you know there'll be multiple offers and it'll probably end up selling for more for more yeah yeah especially in subdivisions where um inventory doesn't open quite often those are the ones that are harder to get in but it is worth it you know it is worth it so it's a it's a really good goal to have and um would would really like to help you achieve that goal yes yeah i mean just living here in paradise look at look at our camps no but it's really it's really nice to live here in hawaii what is like the most the favorite thing that you like to do when you're um off work go to the beach yeah which which one i like to go to magic's yes oh right now there's no sand oh there is sound sound well a little bit oh it came back a little bit yeah oh i was thinking the reason why they call it magic as well yeah and there's waves yeah you're right it's called disappears in a while but cool i was thinking about kua um [Music] so let's it let's move on to another question um how can i get okay so where do oh what is the difference between pre-approval and pre-qualification so a pre-qualification is basically um you tell me what your income is you tell me what your your savings are and and i'll do a calculation and come up with a number and say you're pre-qualified haven't verified it haven't pulled credit haven't run the numbers through the automated underwriting system that's kind of a pre-qualification pretty easy to do you don't have to do a lot yeah it doesn't have much meaning though whereas a pre-approval we're doing a complete application running pulling your credit running it through an automated underwriting system um sometimes we'll verify income and assets during the pre-approval process but we don't have to do that and if we're verifying it we just go off of what you say and we'll use that pre-approval and a lot easier if you're employed or you're getting a w-2 and a pay stub it's pretty easy to determine what you qualify just based on you tell me what you earn um self-employed is a little bit different because being self-employed a lot of people tell you well i make 100 000 a year and i'll look at the tax return and that was their gross they met gross sales of a hundred thousand by the time they deduct all their expensive they only made twenty thousand yeah and so it's a little bit harder to do pre-approvals not harder but a little more it takes a little bit more to do a pre-approval for somebody self-employed because i don't want to issue a pre-approval to somebody and then you go out and you find something and then go oh you don't qualify yeah and so if you're self-employed i would ask for two years tax returns to determine what your income would be that we could use beautiful yes yeah and you know what and uh for uh people that are going through the pre-approval process having an expert on the field like truly pays off um you know you can go to a bank on the mainland and you know they might you know send you through like a whole call center of people and you don't have like specific uh person to look over your file and go over all these things with you so i think that's where it kind of like pays off to have somebody by your side and it doesn't like i would love for you guys to utilize jimmy but it but if you have somebody that you trust kind of like jimmy we'll make things easier on the lending side um and and also um because we are in an aggressive market i am able to if i need to knock on your door and be like jimmy what's up with this uh file or this uh pre-approval letter to where if you're um um dealing with somebody on the mainland it's harder it's harder to get in touch and so yeah and so those are also the benefits of working with somebody locally uh we have a question from somebody in the group um judy she's asking what is the difference between a second home and as a second home and an investment property okay a second home is a property that you would purchase to use as a secondary residence you have a primary residence you can't have a secondary residence next to your primary the rate's the same for a secondary versus a primary and the secondary resonance you can use and you could actually rent the secondary residence out but you have to occupy that for that secondary home the second home for at least two weeks out of the year and you can't sign long-term leases um and then you'll be able to qualify for a second-round down payments minimum down payment on a second home would be ten percent um and then um the rate is the same as a primary um so a lot of people like hawaii obviously people live in the mainland they come to hawaii and they buy a second home so when they come here they can stay in the house and then they rent it out when they're not here yeah so hawaii is really the perfect place for a secondary residence perfect when you buy the secondary residence you can't use any of the income so if you are renting it out or your plan is to rent it out for part time you can't use any of that income to qualify you have to qualify for the payment without any rental income oh yeah so and then an investment property you need probably looking you can do it with 15 15 down but it's like the loan is expensive it's the rate's going to be a lot higher with 15 down typically if you're doing an investment property you want to have a 25 down payment yeah and you're able to if you have a history of renting property you can use that rental income you can use that rental income as income to offset the payment as well yeah if you're buying a a a new investment property if you have primary residency you want to go and buy an investment property and you don't have um rental expense or management experience of renting a house you'd have to qualify for the loan with that payment you could use the rent to offset the payment but you wouldn't be able to use any of that income so and then and obviously on a investment rate's going to be higher because all and all the loans are based off of risk right perceived risk so if you look at a primary resonance it's going to be generally less risky because that's your primary secondary resonance if things aren't getting trouble easier to let go of the secondary resonance hang on to your primary and then obviously the investment properties can even be the perceived risk is going to be even more because if you do get in trouble you got a second home you got a primary you have an investment property you're most likely going to let the investment property go in theory it's not always like that but that's why they have the differences in rates and not so much on the second home where it's not the rate but it's downpayment and the investment's going to be down payment and rate that is that that's great advice and that's that's um i get asked that question very often as well you know people that are wanting they're looking at hawaii to make an investment uh they're looking for an stbr ready property and so that's something that jimmy specializes on a lot um so here's another question what is the biggest hurdle that you encounter as a lender when dealing with people who are wanting to buy um probably their their fear to apply you know or you know and it can it can be intimidating yeah it can be intimidating yeah but um that and then people are not prepared you know and they don't and they don't have things together yeah um and they haven't even really planned and so when you're looking to apply you want to be able to know what your income is you want to have your documentation together yeah um your pay stubs and your w-2s all information you can get offline or get online and uh having that all together makes it a lot easier but people that don't plan and they just want to come in and be pre-approved and have no idea what they make or what they have saved or what their goal is that makes it a little bit harder yeah yeah you know what i think and going back on the fear of applying we see it very very very often where you know we have conversations with clients that are really wanting to to make this island their home and for some reason they just they you know they yeah the fear of applying right and so and the process is or for me as a loan officer and i sit down and i interview somebody if you don't qualify and he'll tell you no i'll tell you but i'm also going to tell you in a way that doesn't embarrass you yeah it doesn't make you feel bad because it's not everybody is going to qualify for a house yeah not everybody will be able to buy a house yeah yeah but if you we set a plan and you follow those steps it can be achievable and it is for a lot of people exactly and and i think that um him going through your finances and have a better understanding of what you can't afford will just basically jumpstart you to heavily look into like either you can make the move or not right you will help people it'll help you know and you know what and i also and what i like about you is that you don't pressure people into like apply it like apply like you are willing to get in a conversation with them and kind of run through their finances and and you know assess whether it's if it's worth applying if you're not ready for whatever if you're not ready for whatever reason also because there's time frames on the application right well but it's also that you know it doesn't make a whole lot of sense to rush into an application if your credit needs work or you don't have the down payment saved or you started a new job or you're just recently self-employed yeah or or you're self-employed and you're not reporting all of your income yeah those aren't then then you don't then you're not going to qualify yeah yeah yeah well if you are taking anything away from this conversation anything at all try to if you're self-employed try to report all of your income that helps you like tremendously and that's and i get it as a catch-22 oh yeah because you report all your income now the irs wants their share yeah but um you know what what's going to be more to and you know everybody needs to pay taxes i'm sorry yeah you know i'm gonna i'd pay taxes so well paid taxes that's part of it and uh it's one of the things that we're going to look at you know if you're if you're if you're getting a paycheck you know the taxes are taken out yeah you're self-employed you know and you can claim whatever you want to claim yeah um and then when it comes to qualify it's not going to work and then when you're using self-employed income you have to do it an average and we'll do a 24-month average yeah so if you have one good year and the next year is bad you know that's not good right so they'll they'll take the lower of the two years if you have a good year and a better year they'll average so they do the more conservative look at it they won't look at you know 2019 you made 80 000 2020 you made 60. they're not going to do that average they're going to use the lower of the two reverse they would do the average if you made 80 and then you made 100 they would do a 24 month average right so not use the 100 it doesn't seem fair it doesn't seem fair at all that's the cost of being self-employed but you can be your own boss you can hey you're your boss lady or you know or or or boss guy but no buzz guy no no bus guy he knows pigeon though can you break a little pigeon no my dad was an english teacher so oh he's very proper he knows pigeon i don't know if you know if you guys if any of you watching uh we have a couple of people here but if any of you know what pigeon is jimmy could could bring pigeon no but no he won't do it because we're professional because well i'm at the tiki bar but all right so oh how about this one um uh tatiana is asking um we already talked about the credit score requirements so we don't need to go over that as well but it's she said i recently changed jobs but i'm in the same line of work is that okay yeah that's fine typically when people and if you're changing jobs for reasons most of the time you're changing for a better pay or more income yeah and if you're in the same line of work it doesn't affect anything um if you go out of the workforce and you come back it's usually six months yeah when you return back to work um before we'd be able to give you a loan um but changing jobs it doesn't affect anything now if you get a job that's lower it's gonna yeah then you're gonna qualify for less but if you're in the same field it's not like you would have to wait six months but if you go into a brand new field um and you don't have a history of being in that field then there's a waiting period to show that you're able to make that money okay so that answers that tatiana um and um now we're coming almost to the end of our conversation thank you for the people that are watching for the people that are here um so um final thoughts on uh the lending environment what do you think uh interest rates will do in the future um break your magic box nobody knows you know honestly it's not nobody knows what rates are going to do and but everybody has their ideas and you can read and you can study you can look at wall street and see what they're saying and we do and we the rates are based off of two things it's a 10-year treasury and mortgage-backed securities and releasing there's been a lot of volatility volatility you know i've been doing i said 30 years and we've had days and i haven't seen these in a long time where the rates will change three times during the day to higher prices and then at the end of the day they'll change and they'll improve two times and it's just the market that's kind of nervous uh nervous about the 1.9 trillion you know about the money that the government's spending and there's fears for inflation and that causes the rates to move up you know we have you know gas has gone up a dollar oil's getting in the hot all-time highs or not all-time highs but are starting to hit yearly eyes like 65 hasn't been and those all those things factor into what interest rates are going to be and so the thought is is that rates are going to stay relatively low but they are going to go up you know but again we're going up from we don't know two and five-eighths to three and five-eighths or you know even if they're four five percent those are still really good rates um but now we're at some of the all-time lows the rates uh the rates are as high as they've been since i think it was june of last year that they've gone up this last couple of weeks and the when the rates start going up they have a tendency to go up a lot quicker so you know if it once it starts moving there's fear and people nobody wants to be stuck buying a mortgage-backed security at a coupon of one and a half to two percent when they can get two and a half to three and you're gonna have to hang on to that for 30 years it's it's not a good thing so when they start going up everybody wants to try to sell the map more back securities and it causes rates to go up and uh but nobody knows nobody knows yeah it is very difficult to predict um so the best way if you're in it like we talked about a little bit earlier if you're nervous about the market yeah you know then lock your interest rate because that protects you um and i've seen this where people don't lock and it starts going up and up and you can get to the point where rates increase to where you won't qualify so if you're barely qualifying on the rate that you that you're started started with you might want to lock because if it starts going up then you don't qualify and that's kind of a bummer yeah you don't want to be there yeah you don't want to be in that position well guys thank you so so much for being here and for tuning in and if you if any of you have any questions feel free to email us um jimmy what's your email address my email address is really easy it's jim jim dot m dot alan a-l-l-e-n at rate dot com yes super easy you proud that i remember that yes i know my own email address no yeah but do do email me or call me my number is um 808 938-3913 that's a local number local number and the one thing i do and i i strive to do this i will answer your phone call he does and i work i'm in this business you have to work all days yes same even on vacation working even on vacation and he's always available he's always a phone call away a text away an email away and there hasn't been a time where i cannot get a hold of you so thank you for that you're welcome well if you guys have any other questions uh for me and jimmy feel free to post them in the comments but if not we'll just say hello how aloha friday guys bye