Ka Wai Ola - Office of Hawaiian Affairs, Volume 11, Number 3, 1 March 1994 — First Hawaiian processes first OHA homestead loans [ARTICLE]

First Hawaiian processes first OHA homestead loans

by Jeff Clark OHA chairman Clayton Hee says, "There is no loan program like it in the United States." In September 1993, the Office of Hawaiian Affairs established two $10 million revolving loan programs for Hawaiian homesteaders. The 10-year down-payment and home improvement loans are funded by OHA, guaranteed by the Department of Hawaiian Home

Lands, and administered by First Hawaiian Bank. Down-payment loans up to $20,000 are for purchase of turnkey houses that are ready to move into, but not for new construction. Home improvement loans up to $50,000 are available to remodel, upgrade. improve. and do any construction tied to an existing dwelling. This also covers include solar water heating. walls, fences and driveways. The interest rate for both

loans is 6 and 7/8 %. These loans are second mortgages, and the interest rate is fixed. In comparison, the interest rate for First Hawaiian Bank's standard second mortgages currently mns at 7.5 %. First Hawaiian Bank real estate loan officer Wonda Mae Agpalsa says native Hawaiian homesteaders have shown an interest and have applied, and that those applications are currently being processed.

He mau ninau, a me nā pane ... Answers to the most commonly asked questions: • Why is there a "halloon payment" at the end of the loan? Although the term of the loan is 10 years, to keep the payments at a minimum the monthly installments are computed over 20 years. This means that your monthly installments are made as if it was a 20year loan - the longer the term, the lower the payments. Since the term of the loan is 10 years, about half the loan will still be due at the end. • How mueh are month!y payments on, for example, the maximum loan amount? Down payment loan (maximum amount, $20,000): monthly payment is $156.56. Home improvement loan (maximum amount, $50,000): monthly payment is $383.91.

• What credit rating do I need? The program requires "no delinquencies or derogatory credit in the last three years at least," Agpalsa says. "The credit has to be elean, but we will review eaeh application on a case-by-case basis. What I look at is the overall credit history." • What kind of debt-to-income ratio would I need to get the loan? Only 38 percent of your ineome should go to your debts, including the proposed mortgage payments. • How mueh kōkua ean I expect at the hank, and who ean I talk to instead of waiting in line for a teller? Any loan representative in any First Hawaiian branch ean help you. Ask for the OHA loan brochure and application packet, whieh comes with instructions. Ask the loan rep any questions you may have, or eall Agpalsa, whose phone number is listed on both materials. • Can I get an applieaiion in the

inail? Yes. Call your loeal branch. Residents of Moloka'i, where there is no First Hawaiian branch, ean get one from the island OHA office (553-361 1). Residents on any of the neighbor islands may eall Agpalsa collect at 0-525-8964. • Can I fill it out at home and then mail it in or submit it in person? Yes. • After I apply, how long will it take to get an answer, and if the answer is yes, how iong until closing? "I have been trying to get answers back within the week," Agpalsa says. "I try to do a 24-hour turnaround, but the problem is, delays are caused when the applieations eome in incomplete." Onee the loan is pre-approved, "it depends on how thorough the apphcants are" in submitting all the palapala. "We should be able to

final-approve these loans within a month. Onee I have all the documents, I will final-approve the loan and the credit packet is submitted to DHHL for review to secure the guarantee." • Who pays closing costs, and how mueh? On a $20,000 maximum down payment loan, you'd pay $459.95 in closing costs; for the $50,000 maximum home improvement loan, you'd pay $924.12. • Is there anything else I should know? Home improvement loans are for existing dwellings. The work must be done by a licensed contractor. There are also ineome limits, as this program is designed to affect those falling into the "gap group" (see the informational brochure for details). In addition, for the down payment loan, the borrowers must eome up with 3 % of the home's cost on their own.