Canadians Buying Real Estate In Kailua-Kona, Hawaii - Helpful Tips
Canadians have known for a long time now that Kona, Hawaii is the place to go to take a break from their cold Winter weather. The Kona Coast is the only part of the Hawaiian Islands that has it's dry season during Winter. I can't tell you how many times i've turned on the news during Winter months to see flash floods in Oahu and Kauai while we are enjoying sunny dry weather in Kona. Often, Canadians choose to buy a home or condominium in Kona as an investment that they can enjoy with family and friends for years to come. Here are a few tips for Canadian buyers to help get the process started.
Canadians buying a home or condominium in Kona, Hawaii do not need a social security number, only a valid passport. Lenders in Hawaii offer an array of financing options including 30 year fixed rate loans for Canadian buyers. The home or condo must be purchased as a second home or investment property which increases the rate slightly in comparison to an owner occupied loan. U.S. lenders also require a larger down payment, often 30% - 35% of the purchase price dependng upon the institution. Canadian's buying real estate in Hawaii are also required to open a U.S. bank account and set up direct debit for the monthly mortgage payments.
If a Canadian owning a home or condominium in Hawaii decides to rent it, they will need to register for a TIN (taxpayer I.D. #). For long term leases, homeowners are required to pay 4.166% general excise tax (GET). If the home or condo is rented short term (1 month or less), the homeowner is required to pay an additional 9.25% transient accommodation tax. If you have stayed at a vacation home or hotel in Hawaii, you may have seen the GET/TAT tax on your bill as these taxes are passed on directly to the tenant or customer.
In Hawaii, when an offer is accepted and the buyer and seller enter into a contract, the next step is to open escrow. Escrow companies in Hawaii are the neutral third party that makes arrangements for title insurance, gathers all of the fees from the parties involved, accepts funds from the buyer and lender, arranges for the deed to be drawn up and sees to it that it is recorded so that ownership is properly transferred.
In Kona, Hawaii the fee for escrow services are split 50/50 between the buyer and seller. It is also customary for the seller to pay 60% of the title insurance policy, with the buyer paying 40%. There are also other fees that the buyer incurs when purchasing a home in Hawaii including recordation, lender fees, inspection and a few more depending upon the transaction. All of the fees associated with the purchase of the real estate in Hawaii are required to be provided by the escrow officer to the buyer on a standard government form called the HUD 1. In addition, U.S. lenders are required to provide a Good Faith Estimate when you apply for the loan. This estimate must include the interest rate and terms for the loan including all fees charged by the lender. These lender fees cannot be increased prior to the funding of the loan without a full disclosure form signed by the borrower. This aspect of real estate lending has been restructured recently to protect consumers purchasing or refinancing real estate.
If you would like more information about purchasing real estate in Kailua-Kona Hawaii, contact me, Rich Bosselmann at (808) 345-5085. I can also be reached via email at Konaconnection@gmail.com . You can always go to my web site to search all Kailua-Kona real estate listings, watch neighborhood video tours, beach videos and more. www.YourKonaRealEstateConnection.com