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Refinancing to tap into home’s equity can help with new purchase

Presented by:
Bank of Hawaii

With all the news about low mortgage rates and higher home values in Hawaii, it is no wonder that some Bank of Hawaii customers have been leveraging equity in their homes toward other real estate investment purchase opportunities. And, with the local culture of families helping their children buy their first condos or homes, parents are seen refinancing to get cash out of their properties, which they can use as a gift toward a down payment.

“In recent years, we have seen many loans closing where the down payment comes from a family member,” said James Martin, vice president and sales manager for Bank of Hawaii’s neighbor islands and West Oahu regions.

“Parents may gift funds for a down payment. However, if total gifts exceed $14,000 per person, per year, the parent may have to file a gift tax return (Form 709),” said Kent Kasaoka of AATS LLC. “Consider retaining a CPA to help you prepare this filing for you,” he advised.

As for whether it is a good time to purchase real estate, Realtor® Brandon Lau of Choice Group at Locations said, “Property values have been increasing for the past 40 years. While there will always be ups and downs, if people have a need for housing and can work the financing, buying now can help them avoid potential higher prices in the future.”

Borrowers will still have to put down a little of their own funds for the down payment if they don’t receive a gift. It is important for them to start early to set aside money for this, even if it is a small amount, to reach their goal of homeownership. They should get educated on what the numbers look like. For example, a condo or home priced at $400,000 could be financed up to 97 percent. This would require the 3 percent or $12,000 from the buyer via their own savings, gifts or grants.

In August, Honolulu Star-Advertiser, together with sponsors Locations and Bank of Hawaii, hosted a Homebuyers Fair. People of all ages attended workshops, including the Homebuyer Workshop, where a panel of experts spoke about related topics during the homebuying process. Besides the tips from a CPA and Realtor®, appraiser Brent Matsuwaki spoke about what an appraiser looks for during the inspection of a home or condo being purchased. Safety, properly completed construction and making sure the building codes are followed are items he checks for. Matsuwaki then takes into consideration the market comparables for recently sold homes to come up with a valuation.

“We have been working with a lot of homebuyers that can use the assistance on the down payment,” said Martin. “Some individuals are able to refinance and keep their payments the same, when pulling out some funds to help finance the down payment for their family. It takes a lot of discussion and time to make sure all parties involved have a good understanding and agreement.”

For more information about upcoming seminars and prequalifying with gift funds, visit

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