Refinance in Hawaii

Are you really working with the best mortgage company for you? Our guide to refinances in Hawaii and the best places to refinance a mortgage loan in the Aloha State will make it easier to get the loan you need. 

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Best Refinance Lenders in Hawaii

There’s no rule that says that you need to refinance with the same company that gave you your original mortgage loan. If you aren’t satisfied with your current lender, consider refinancing with a new one. You can explore some of the best refinance mortgage companies in our table below. 

Current Hawaii Refinance Rates

Do you know your current mortgage interest rate? When you refinance a mortgage loan, you’ll accept a new interest rate in line with current market rates in your area. If rates have gone down since you got your loan, this can save you money. However, if rates have gone up, you might want to hold off on refinancing until you can save.

Below, you can view a sample of what you might pay for your refinance if you took it out in Hawaii today. We update this information regularly to ensure that you have access to the most recent data available.

Refinance Process

When you refinance your mortgage loan, you’ll take out a new loan, pay off your old loan and begin making payments on a new mortgage. Essentially, you replace your old mortgage with a new loan that has newer, more favorable terms.  

No matter if you’re working with a local lender (like the First Hawaiian Bank) or an online mortgage lender (like Quicken Loans’ Rocket Mortgage platform) you’ll go through a very similar refinancing process. First, decide what you’d like to get out of your refinance. Some of the goals you might have when you set out to refinance include:

• Lowering your monthly payment
• Lowering your interest rate
• Taking cash out of your property (with a cash-out refinance)
• Changing your loan type

After you decide which type of refinance you need, you’ll apply for a loan using your lender’s process. Most lenders now allow you to apply for your loan entirely online. Your lender might ask you for bank statements, W-2 forms and paystubs when you apply, so have these documents ready.

Shortly after submitting your application, your lender will return with a decision on your refinance. It will also quickly begin the underwriting process and verify your financial information to make sure that your income and assets match what you wrote on your application.

Your lender will also usually schedule a new appraisal when you apply to refinance. The appraisal you receive will be very similar to the one you got when you applied for your original mortgage loan. You can take steps to ensure that your appraisal closes with a high value, including:

• Creating a list of upgrades you’ve made to the home since moving in
• Attending the appraisal and pointing out any areas where you’ve made improvements
• Cleaning up your home before your appraiser arrives

After your appraisal and underwriting close, it’s time to close on your new mortgage loan. Your lender will send you a document called a Closing Disclosure with the final terms of your loan. Acknowledge your Closing Disclosure with your lender so they can schedule a closing meeting.

At your closing meeting, you’ll sign off on your new loan. Be sure to bring the following documents to your closing meeting:

• A government-issued photo ID
• Your Closing Disclosure
• A cashier’s check or proof of electronic funds transfer for your closing costs

After you walk away from your refinance, you’ll only be responsible for your new loan. 

When Should You Refinance in Hawaii?

If you feel trapped in your mortgage loan, don’t panic. A refinance can provide a solution to many mortgage woes, including:

• A mortgage payment that’s too expensive: If you can’t afford your mortgage payment, consider refinancing to a longer mortgage term. When you lengthen your term, you leave yourself with more months to pay off your loan — which lowers what you owe each month.
• Unnecessary FHA insurance payments: When you have an FHA loan, you must pay FHA mortgage insurance every month. Though you cannot cancel this payment, there is an easy workaround — refinance your FHA loan into a conventional loan once you have at least 20% equity in your home.
• Credit card debt that’s piling on interest: If you have credit card debt, you might be paying up to 15% interest on your balance annually. When you compare the average credit card interest rate to the average mortgage interest rate (around 4%) it’s clear that mortgages are a much more affordable way to borrow money. Consolidating your debt with a cash-out refinance can be a much more manageable solution for homeowners with significant high-interest debt. 

When Should You Not Refinance?

Refinancing isn’t right for everyone. If any of the following situations apply to you, now might not be the ideal time to refinance your loan.

• Your loan is new. If your loan is very new, be wary of taking a cash-out refinance. You might not yet have enough equity in your home to justify cashing out.
• You think no-closing-cost refinances are free. In some circumstances, your lender might offer you a no-closing-cost refinance if you cannot afford to pay your closing costs upfront. While many homeowners believe that this means they don’t need to pay for closing costs, this isn’t true.

When you have a no-closing-cost refinance, your lender adds the balance of your closing costs onto the principal balance of your loan. This option also usually comes with a higher interest rate as well. While this might seem like you’re saving money, taking a no-closing-cost refinance might actually end up costing twice as much or more of your balance. You’re usually better off waiting until you can afford your closing costs in full rather than taking a no-closing-cost refinance.

• You don’t have 20% equity and you want to refinance to a conventional loan. If you plan to refinance from an FHA loan to a conventional loan, be sure you have at least 20% equity in your home before you apply. If you don’t have 20% equity, your lender might require you to buy private mortgage insurance (PMI), which is typically more expensive than monthly FHA insurance.

Bad Credit Refinance

Do you have bad credit? If so, you might have a more difficult time accessing the refinance you need. Mortgage lenders look at your credit when you refinance because if your score is too low, you might be less likely to make your loan payments on schedule. This often means that lenders might not be willing to work with you or they may extend significantly higher interest rates to you.

There are a few solutions you can use to refinance a mortgage loan when you have bad credit. If you have an FHA loan or a VA loan, you might want to refinance your rate or term with an FHA streamline or a VA interest rate reduction refinance loan (VA IRRRL). Both of these options can allow you to refinance your rate or term without a new appraisal or a credit check. To qualify, you must already have an FHA or VA loan, you must have a history of timely payments and you must only be refinancing your rate or term.

You might also want to apply for your refinance with a non-occupying co-client. A non-occupying co-client is someone who agrees to take financial responsibility for your loan but who doesn’t live in your home. If you have a friend or family member who’s willing to sign onto your loan as a co-client, you might be able to access a refinance with a low score.

Of course, you can also wait to refinance your loan until you raise your score. Taking a few months to focus on making your loan payments on time and limiting credit usage can drastically increase both your score and your refinancing options.

Is Now the Time to Refinance?

If you think that a refinance in Hawaii might be the right decision for you, start researching loan options and lenders offering refinances in your area now. Like any other type of mortgage loan, a refinance can be a major commitment, lasting up to 30 years. You wouldn’t jump into a mortgage before calculating your payment, speaking with multiple lenders in your area and knowing all of your options, so don’t be afraid to take plenty of time researching your mortgage options.