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The State of Hawaii is a set of islands in the Pacific Ocean, which is over one thousand miles from the State of California. Hawaii is the youngest state in the United States as it was not admitted to the union until 1959. Hawaii is currently the 43rd most populated state in the country with a population of around 1.4 million residents. The state’s real estate market continues to be very active with both local residents and other real estate investors looking to buy either a vacation home or a rental property.

Mortgage Laws in Hawaii

Those that are looking to buy property in Hawaii and mortgage lenders that are looking to provide a mortgage should be aware of all mortgage laws in the state. Hawaii has mortgage laws that are comparable to many other states in the union. Many of the laws that have been put in place are designed to help the consumer and prevent another occurrence of subprime mortgages. Lenders in Hawaii are required to charge additional mortgage insurance in the event a borrower has less than 20% equity or have a low credit score that doesn’t meet conventional requirements. Lenders are also not permitted to provide refinanced mortgages that offer little to no benefit to the borrower and cannot charge prepayment fees.

Current Mortgage Rates in Hawaii

Mortgage rates in Hawaii have been increasing for the past few months, but are still near historic lows. 30-year mortgage rates for conventional loans and well-qualified borrowers are around 4.25%. 15-year mortgages are around 3.50% and 5-year ARMs are around 3.0%. Borrowers that are taking out a loan larger than the FHA limit of $417,000 will typically receive rates that are 50 basis points higher.

The interest rates provided are available for consumers that are looking to buy their primary residence. Consumers that are looking to buy either a vacation home or a rental property may have to pay another 50 to 100 basis points more.

Outlook for Hawaii Housing Market

The housing market in Hawaii has remained pretty strong even during the economic downturn. While vacation properties are typically the first thing that struggling consumer forego, Hawaii’s core market has done well. Much of this is due to the strength of the overall economy related to the consistent and stable military presence on Oahu. Furthermore, Hawaii tends to draw home buyers from residents in the state, the rest of the United States, and foreign investors and travelers.

5 Biggest Cities in Hawaii

Honolulu is by far the most populated city in Hawaii. The city has a population fo 370,000 residents and is the economic center of the state. Pearl City and Hilo are the second and third most populated cities in the state, each of which has a population of around 45,000 people. Kailua and Waipahu each have around 35,000 residents and are the fourth and fifth most populated cities in the state. The most populated island in Hawaii is Oahu, which is then followed by the Big Island, Maui, and Kauai.