Buying Now: How Interest Rate Increases Affect YOU

“Interest rates are at historic lows right now!”  I’m sure you’ve heard it, but how do interest rates affect you and your purchase?

Interest rates affect your monthly payment, and the amount you will have paid by the time your loan is paid off.

Minute increases in interest rates directly affect the amount a buyer ends up paying in the short and long-term.

Let’s run some numbers to better illustrate.

We have found your dream property, at your price point of $500,000.

The interest rate on your $500,000 dream home is 3.875%. For a 30 year, conventional mortgage you can expect your monthly principal and interest (P&I) payment to be  $2351  By the time the loan has been paid off, you will have paid $1,595,967.

But, you just aren’t certain. Prices have been going down, and you want to wait a week or two, see if the sellers reduce their price. What does waiting a week or two hurt, right? 

Unfortunately, when you next look at this purchase, interest rates have gone up. Now, the best rate you can get is 4.25%, and increase of .375%.

Your same property, now at 4.25%, is costing you  $2460 per month. Principal and interest payment has increased by $109.

Along with that the total amount paid on the loan which previously was $1,595,967 has now increased to $1,785,325, a difference of $189,357 over the life of the loan. Wow. 

The chart below illustrates how changes in rates will continue to affect you, at different percentages. 

Value     Int Rate         Term             P&I Payment        Total Paid                Difference

500K        3.875%         30 year           $2351.19             $1,595,967            From 3.875%

500K        4.00%           30 year           $2387.08             $1,656,749           $72.62/60,781

500K        4.25%           30 year           $2459.70             $1,785,325           $108.51/189,357

500K        4.50%           30 year           $2533.43             $1,923,849           $182.24/327,882

The question you should be asking yourself is, do you forecast the market dropping far enough to cancel out an increase in interest rates? Or are you ok paying an additional $70-$180, or more a month, to continue waiting on your purchase?

Interest rates are at historic lows right now make sure you take advantage of them!

West Hawaii Oceanfront: Kona Bay Estates 2 Parcel Offering

West Hawaii, Kaliua Kona, Ocenfront, Luxury, Kona, Big Island Real Estate,Kailua Kona, Oceanfront, West Hawaii, Big Island, Luxury, Kona Bay Estates, Kona Bay Estates is home right now to a tremendous oceanfront offering! 

My listing at 75-5444 Kona Bay Drive offers contiguous oceanfront parcels, TMK numbers   3-7-5-5-40 & 3-7-5-5-41 together for purchase! 
Live in your airy 3bed/3bath deluxe beach cottage that boasts ocean views from every room, while building the estate property you’ve always dreamed of next door (Lot #40)! Together these parcels combine for over half an acre of oceanfront living!

Lot #40 offers you 16,972 sq. ft. of prime ocean front property that is hands down one of, if not THE BEST parcels on the market!

Kona Bay Estates is a mature, private, gated, ocean front community that provides 24/7 roaming security, direct beach access & represents the truly exquisite Kona lifestyle.

Enjoy ocean front living at it’s finest in Kona Bay Estates!

Buyer Property Tips – Asking The Right Questions

When previewing property in West Hawaii remember you aren’t just looking at the home, condo or land, you are gathering valuable information. The quality of the information you gather will prove itself to be very helpful, when you are ready to make an offer. Simple questions you ask can save you thousands of dollars when it comes to the negotiating process!

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Often times listing agents of the subject property host the viewings. You will arrive with your buyer’s agent, and the listing agent will give you a tour of the property. On this tour you will have the opportunity to:

Ask pointed questions

Why are the current owners selling?

Moving off island? Job loss?  Illness in the family? Just testing the market? You will get valuable information into the sellers motivation, and how quickly the property needs to be sold. This simple question can speak volumes. Let the listing agent talk, as you listen and take notes.

How did you arrive at the current list price?

Each property is unique, with each seller having different motivations. You will at times run into a seller that is holding out hope for that one buyer that is willing to pay much higher than market value, believe me, I’ve run into them myself!

Realtors provide their clients with facts and figures, market statistics that illustrate where the market is and at what price the sellers are most likely to sell their property. Once presented, sellers embrace this information, or take into consideration and position their property differently. The listing agent will have provided this information, and if the property is $50,000-$75,000 overpriced, will have a hard time keeping a straight face.    What he or she will be able to do is provide neighborhood information, and give you the reasoning/facts as to their current price.

At the conclusion of the showing make sure you and your buyer’s agent discuss what the listing agent has relayed. Compare notes and fact check with your agent on what was presented in the showing.

Remember, you aren’t just looking or previewing, you are gathering valuable information on that property, and on that specific seller. Information that you can put in your buyer’s tool kit, that will help YOU when it is time to write-up an offer!

I’m off to show property in beautiful West Hawaii, stay tuned for more buyer property tips!

Alii Drive Oceanfront Cottage HUGE Price Reduction!

**Post Update** The below mentioned property SOLD April 1, 2012 for $650,000 CASH!

This stunning property was on my short list of HOT buys in West Hawaii, and this morning catapulted itself to the top of the list.

My phone rang earlier today, and with it came HUGE news! I was alerted that the below oceanfront cottage that was originally listed at $949,000 in May of 2011, reduced to $799,000 over the past year, had been reduced by another $100,000, offered for purchase now at  $699,000!

Alii Drive, Oceanfront, West Hawaii, Great Buy, Deal, Kona, Kailua Kona, Real Estate, MarcoInKonaWOW.

78-6654 Alii Drive is an oceanfront lot a little over 9,000 sqft. The single level residence is a super cute 1bed/2bath cottage located on Keauhou side of Alii Drive. Seller has completed plans for an upstairs addition which I am in receipt of and am happy to pass along to interested parties.

Your view looks directly onto the surf break of Kahaluu Beach Park, giving you the option to go for a snorkel or grab your board and jump in!

West Hawaii, oceanfront, $699,000…unbelievable!

West Hawaii’s Newest Real Estate Blog!

As a West Hawaii resident whose profession is real estate, launching a blog devoted to property, lifestyle and island happenings I felt had the potential to be informative and helpful to persons interested in our own wonderful part of the Big Island, West Hawaii.

I have been an active, licensed Hawaii Realtor with Clark Realty Corporation since 2007 and with that has brought market experience, knowledge, along with a few absolutely hysterical stories!

Real estate isn’t just a “job” for me, it is something I personally enjoy. Being able to preview, show and sell amazing property in one of the most beautiful locations on the planet, truly is a gift.


Mahalo for stopping by, and be sure to check back frequently for updates!