B4 • Friday, October 14, 2022
thegardenisland.com
THE GARDEN ISLAND
MORTGAGE RATES PASS 6%, NOW WHAT? How to handle climbing payments as rates rise Liam Gibson WEALTH OF GEEKS American homeowners are feeling the pinch as the Federal Reserve continues to ratchet up interest rates to combat inflation. The average rate for a 30-year fixed rate mortgage rose above 6 percent this month for the first time since 2008, putting both house hunters and homeowners in a bind. The higher rate for fixed-rate mortgages is forcing more prospective buyers to sit on the sidelines of the housing market and continue renting instead. Yet, raised rates will also hit people with variable-rate mortgages, which periodically adjust their rates in step with rate changes for new loans. While such changes will leave many borrowers feeling helpless, financial advisors say there are several options they can take to offset the pain of rate hikes. Up and Up The average rate on a 30-year fixed mortgage has more than doubled from a year ago, when it was just 2.86 percent, per a recent Freddie Mac survey. This could cause borrowers to pay an enormous amount more over the long term. For instance, the interest paid on a $400,000 home loan over 30 years would be $200,000, but total interest at 6.02 percent would be more than double to $465,000, according to Bankrate.com’s mortgage calculator. Shelter is a primal human need, which is why housing is often the
Average mortgage rates go up another one-quarter point ASSOCIATED PRESS WASHINGTON, D.C. — Average long-term U.S. mortgage rates reached their highest level in more than two decades this week and are likely to go higher, as the Federal Reserve has all but promised more rate increases in its battle to tamp down persistent inflation. Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate climbed to 6.92 percent from 6.66 percent last week. Last year at this time, the rate was 3.05 percent. The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, rose to 6.09 percent from 5.9 percent last week, the first time it’s breached 6 percent since the housing market crash of 2008. One year ago, the 15-year rate was 2.3 percent. Many prospective buyers have been pushed out of the market as average mortgage rates have more than doubled this year. Late last month, the Federal Reserve bumped its benchmark borrowing rate by another three-quarters of a point in an effort to constrain the economy and tame inflation, its fifth increase this year and third consecutive 0.75 percentage point increase. So far, there is little evidence the Fed’s strategy is working. Another report from the government Thursday showed that consumer inflation remained much too high at 8.2 percent. Combined with the 8.5 percent inflation at the wholesale level reported on Wednesday, most economists expect another big increase when the Fed meets early in November.
BRANDPOINT
single largest expense for many families. The rent or the mortgage often takes priority over other essential payments. That stagnant wages and student debt have kept many Millennials priced out of the real estate market is well-known. Yet, the pressure on indebted elderly citizens has increased too. Research from Harvard University’s Joint Center for Housing Studies shows that the share of homeowners age 62 and over with a mortgage grew from 30 percent to 41 percent between 2001 and 2017. Since mortgages are the primary vehicle to homeownership, navigating them is crucial for the well-being of all homeowners, young and old.
the benefits of a fixed-rate mortgage over variables. “While a variable rate mortgage may have been advantageous when you initially purchased your home, it might not be looking like clear skies in the current environment,” said Ryan Bannister, CPA, and owner of 1Up Financial Advisors, which specializes in financial planning for video creators. “I generally like fixed-rate loans better, because then you ‘get what you get’ and it won’t be subject to market changes. New home builders and their lenders will occasionally give great incentives on variable loans. I would urge you to do your due diligence and make sure that a loan makes sense on the specific home you want.”
Fixed vs.Variable
Reach for Refinance
The current economic conditions provide a clear reminder of
Depending on their circumstances and the conditions of their
loan, the rise in rates may incentivize homeowners to seek more favorable rates by refinancing their mortgage. Rate-and-term refinancing involves taking out a new loan to replace your existing one. Ideally, the latest loan taken out is better suited to a borrower’s needs, usually offering a lower interest rate or adjusting the loan’s term (or time length). “You may want to explore refinancing your mortgage to a fixed rate … this would solve your problem of increasing payments,” said Bannister. “But before jumping in, you will want to compare the closing costs (typically between 2-6 percent) to how much you’ll save on your payment. For example, if the closing costs you incur by refinancing are greater than the savings you’ll accumulate over the years you plan to stay in the house, it may not make sense to refinance.” Cash-out refinancing, meanwhile, enables borrowers to leverage their homes to access new lines of credit. Michael R. Acosta, CFP at Consolidated Planning Inc., said this presents borrowers struggling to pay off personal debt with the means to pay it off. “Consider the following — if a homeowner has $25,000 in outstanding credit card debt where interest rates are rising and tend to be around 19.99 percent or higher, they have an opportunity to conduct a cash-out-refinance to pay off the highest rate debt and essentially roll it into their mortgage,” said Acosta. “Will their mortgage payment go up? Yes, based on the outstanding mortgage balance going up and assuming their interest rate goes up
as well … there is a high probability that the increase to their fixed monthly mortgage payment will increase less than what they were paying toward their outstanding loan balance,” he added. “This isn’t 100 percent bulletproof, so it makes sense for borrowers to do their homework, speak with a mortgage specialist and run the numbers,” Acosta said. Pace Is the Trick Refinancing isn’t the only option, though. Payment frequency is also a key factor. Bannister recommends looking into biweekly payments. “If your lender doesn’t charge extra fees to do this, making payments every other week will result in you making an extra month’s payment each year. This can significantly cut down the payback period for your loan if you plan to stay long-term,” he said. Alternatively, if borrowers are near the finish line of their loan, they can dig deep to pay it all off in a lump sum. “Say you are 28 years into a 30year mortgage with a variable rate, and don’t want to deal with the increasing payments, if you have the savings it could make sense to payoff the remaining balance of the loan,” said Bannister. “This really only works in specific scenarios. For example, if you’re living on a fixed income portfolio and your increased mortgage rate is higher than the interest the portfolio is earning.” Managing mortgage payments can be an arduous and vexing process. Yet, rather than simply blindly paying more, savvy borrowers must try to find a way to offset the rising costs incurred amid this difficult economic climate.
www.thegardenisland.com
THE GARDEN ISLAND
Friday, October 14, 2022 Page 5
real estate directory P L A C E Y O U R A D t oday 2 4 6 - 0 3 2 5
ANNOUNCE MENTS
AKC Reg.3 Male Shih Tzus avail. after Nov.15th. 1 Tri, 2 Apricot. 1st Vax. $3,500 808-651-1030
t h e g arde n i s la n d . co m / cla s s i f i ed s
SELL YOUR STUFF
General
FOR AS LITTLE AS
9.99
$
Merchandise Wanted
Pets
808-246-0325
KAUAI’S
For Immediate Hire Cashier, Store Associate and Lumber Associate
Mini Labradoodles Non Shedding All Vax Done 808-329-7531 or 808-937-2516
Omao
Lihue
OMAO MERCHAN DISE
WANTED Original Rice Bags great condition, all sizes & brands welcome. 808-335-5797
Cemetery Plots
Lihue - $1,450,000 5Bed / 5.01Ba Interior size: 3027 sq. ft. Land Size: 9,174 sq. ft. MLS663176 Charissa Riofta RS-82661 808-639- 3752
$5,000,000 Vacant Land Lot Size: 7.46 acre(s) Tom H Shigemoto RS-53693 808-651-5273 Mark K. Tanaka RB-9222 808-639-0367 MLS 663481
Hardware Hawaii, known 2 Burial Plots for their “legendary” Kauai Memorial customer service, is looking for motivated Gardens individuals that have the $10,000 for both. power to reach for more. 808-822-9120 Servicing Hawaii for over 66 years. Positions Leave Message starting at $16.00 per LIHUE hour w/ Great Benefits. Many ways to apply: email *Restrictions may apply. Call for details. humanresources@ Deadlines: noon on Friday for Sunday and Monday. (We are closed advertisers, The Garden Island does reserve the right to edit, hardwarehawaii.com Regular, single-column classifieds in The Garden Island can 260-8815 Saturdays and refuse, reject, or cancel any ad at any time. All ads are subject call (808) or Sundays). Business Hours Call Center OMAOfor losses be placed until 4:45pm on Monday, Tuesday, Wednesday, to approval prior to publication. We are not liable drop by our Koloa store for Monday–Friday; 7:30 a.m.–5:30 p.m. on the spot and Thursday for the following day, noon on Friday for an Sunday The interview. Garden Island Real Estate Deadlines: To place, correct or expenses resulting from publication errors or omission of and Monday. Please call your sales executive or 246-0325 for or cancel a Friday real estate/rental single-column ad, please an ad at any time. All ads are subject to approval prior to Warehouse Recycled Appliances deadlines for larger, multi-column ads. callWorkers by noon on Thursday. publication. We are not liable for losses or expenses resulting Daytime/Overnight Washers,Dryers, from publication errors or omissions of an ad. Advertising rate Full Time and Part Time Stoves & day it runs in the paper. cards are available from any sales executive. Ads are subject Shifts Check Available Cancellation/Correction Deadlines: To cancel or change your ad for errors the first $1,880,000 Immediate Start Refrigerators $250+ an ad in the Garden Island, call us by 4:45pm on Monday, In We credit for errors reported after the to the rate cardVacant in effect at the time they are placed. Land Lihueare unable to6 issue months Tuesday, Wednesday, and Thursday for the following Call day,HIEmployment first day of publication. Whilewarranty. we try to accommodate our Lot Size: 0.74 acre(s) Tashi 808-652-0551 Mark K. Tanaka 808-482-3900 slever@ RB-9222 hi-employment.com 808-639-0367 HANAPEPE $780,000 Ashley M. Carvalho 3 Bed/2 Ba 808-639-9307 Interior Area: 1,531 sq.ft. MLS 664059 Lot Size: 8,059 sq. ft. Melinda Yomen RS-56237 Sat 10/15; 8am-12pm 808-482-0452 Lihue Neighborhood Center MLS 655642 3353 Eono Street Clothes, bags, shoes, SOLD household goods, toys, furniture and much more! 100% proceeds go to Alzheimer’s Association $1,495,000 3 BED/3 BATH 3,200 sqft Interior 18,684 sqft Land Carol C. Cummings RB-14915 808-651-4766 SOLD Shelly Kaui-Carvalho AKC Labrador Retriever RS-64829 Puppies with Papers. 808-652-3886 $1,700/OBO.Call or email SHELLY KAUI-CARVALHO Must see to appreciate this one-of-a-kind CAROL C CUMMINGS RB-14915 LIHUE - $500,000 MLS 665879 for info. 808-335-2808 2Bed / 1Ba concrete home perched on the Hanapepe Rim RS-64829 (RB) CRB, CRS, GRI, SFR thegardenisland.com kauai8888@gmail.com Interior size: 704 sq. ft. with VIEWS, VIEWS, VIEWS! LAND AREA: 18,684 SF (RS) ABR, CRS, SFR, SRS Ground Floor/Yard 808-651-4766 INTERIOR LIVING AREA: 3,200 SF MLS661110 808-652-3886 kauairealty@gmail.com Clifton Kukino Price: $1,495,000 MLS# 665879 RB-15364 Shelly@kauairealty.net Shelly Kaui Carvalho (RS)-64829 808-652- 3886 WAILUA $939,000 3Bed /2Ba Interior size: 1,192 sq. ft. Lot size: 19,384 sq. ft. MLS663084 The Garden Island is seeking a Carol Cummings RB-14915 808-651-4766
MERCHAN DISE
A WEEK
ON ALL MERCHANDISE ADS*
Appliances
WE GLADLY ACCEPT:
Hanapepe
JUST LISTED!
Garage & Lanai Sales
HANAPEPE RIM
Pets
Wailua
Subscribe today
245-0433
We specialize in Residential Sales and Investment / Resort Condominium Properties. AND, we love working with Local Buyers looking for their new home!!!
newspaper distributor
Independent contractors are responsible to pick up the newspapers with a dependable vehicle daily. Successful candidate should possess sales, management, customer service skills, and must be able to recruit and train carriers. Candidate must be 21 years of age, have a valid driver’s license with a clean driving abstract and proof of insurance. For more details, contact Sharene at (808)690-8909 or email schun@staradvertiser.com
808-822-3100
www.kauailandmark.com
Larry Fudge RB-18519 808-635-1111
SOLD!
Diane A. Pavao RS-58020 808-651-3557
We are an equal opportunity employer. We recognize and appreciate the benefits of diversity in the workplace. People who share this belief or reflect a diverse background are encouraged to apply.
Stay Informed
Subscribe today 245-0433 thegardenisland.com
BUSINESS
service guide 245-0456
FOR MORE INFORMATION, CALL DIANE 245-0456 THE GARDENISLAND.COM/CLASSIFIEDS
Carpentry
Carpentry
Best Samaritan Contractor Rockwall, All brick work, All tree servicing, Foundati on/Footings, and All Landscaping work. Call Samson 346-5404 or 782-6570 Lic. #26959
Best Samaritan Contractor Rockwall, All brick work, All tree servicing, Foundati on/Footings, and All Landscaping work. Call Samson 346-5404 or 782-6570 Lic. #26959
WAILUA
Land Area: 19,384 sq. ft. Living Area: 1,192 sq. ft. Bedrooms/Baths: 3/2 List Price: $939,000 SOLD for $939,999 MLS 663084 Listor/Owner
SALES Account Executive We are looking for the right candidate to call on new and current customers and market our numerous advertising solutions to grow our customer’s business. This person will prospect new business and grow the current account base. Comfort with cold-calling is a must. He/she will be able to represent numerous newspapers, magazines, website and digital products, be able to match those products to the customer’s needs and make sales presentations to key decision makers. A high school diploma is required. A Bachelor’s degree in marketing or business is preferred. An aptitude for understanding statistical information and basic computer skills are necessary. He/she also must possess excellent verbal and written communication skills and be able to successfully multi-task. If you want a career with a fast paced, top media company with excellent pay and benefits, we want to hear from you.
AROL C. CUMMINGS RB-14915 (RB) CRB, CRS, GRI, SFR
808-651-4766
kauairealty@gmail.com
Our full-time employees enjoy a generous benefit package that includes: Medical, Dental, Company-Matched 401K as well as sick leave and paid vacation. Send a cover letter and resume to: 500 Ala Moana Blvd Ste 7-500 Honolulu, HI 96813 or email rstolar@staradvertiser.com We are an equal opportunity, affirmative action employer. We recognize and appreciate the benefits of diversity in the workplace. People who share this belief or reflect a diverse background are encouraged to apply.
Certified Inspector Joseph Quentin
We make your next home inspection a breeze
www.quentinllc.com (808) 855-5280
Stay Informed
Subscribe today 245-0433 thegardenisland.com
PRATT & LAMBERT PAINTS
PITTSBURG PAINTS
BBB Rating: A+ As of 9/30/2020
Custom Color Matching • ProLuxe Wood Finishes • Purdy Brushes • Graco Sprayers Home Owner • Maintenance • Commercial • Industrial
(808) 246-8828 Across From Kauai Community College
4490 Puhi Road, Lihue Mon-Fri 7:30am to 4pm Sat 8am to 12 Noon
Your locally owned paint store. Serving the people of Kauai for over 29 years!