DHHL are for Hawaiians with at least 50% Hawaiian that is traceable through their genealogy.  An applicant must submit an application to the DHHL, along with proof of heritage and then be approved.  Once this is done you go on a waiting list.  This is a very simple explanation regarding this matter. 

The website to go to for more information is http://www.hawaiianhomelands.org/applications/commonly-asked-questions-by-new-applicants/ this link will take you to the page FAQ (frequently asked question) page for applicants.  If this doesn’t help you go to http://www.hawaiianhomelands.org/applications/applying-for-hawaiian-home-lands/ hopefully this page will help as well. 

Why blog about this?  Well a client called yesterday with questions regarding refinancing and possibly taking advantage of the low interest rates and consolidating his debt.  Unfortunately, he spoke to some person at HomeStreet Bank and they told him that because he owns a DHHL home there was no such thing as equity and he couldn’t.  Something didn’t sound right to him so he called and inquired if we knew anything about this. 

Of course we didn’t but we spent the day trying to find out the answers for him and took it as an opportunity to learn ourselves about DHHL homes.  Here’s what we found out thanks to Tom Carmichael, http://tcarmichael-affinitylendinglo.mortgagewebcenter.com/Default.asp?bhcp=1 , at HomeStreet Bank. 

You can refi your home if it is a DHHL home.  You can take equity out if there is any and you meet the loan to value and income to debt ratios. 

First off, if you are just going to refi in order to take advantage of the lower interest rates then you won’t need an appraisal and they can process your request.  If you qualify they will complete the refi for you and hopefully your monthly mortgage payment will go down or you can pay if off sooner. 

Secondly, if you want to take equity out then the process is a bit more complicated.  First an appraisal will need to be ordered and it is not completed using the Market Value assessment but with Cost Approach.  This is a little different and really only an appraiser can do this for you.  Once completed, some math will need to occur.  DHHL requires that 25% equity remains in your home.  This means that if the appraisal comes in at $200,000 then $50,000 of equity needs to remain debt free.  The difference is $150,000.  If your current mortgage balance is $100,000 then you would have about $50,000 to take out to pay off debts, etc…  However, if you current mortgage balance is $150,000 then you have no access to equity to take out. 

Say you fall into scenario one where you have access to $50,000 then you need to make sure your income to debt ratio allows you to qualify for the refi.  Something unique to DHHL properties is that even though your intention is to pay off your debt with the funds taken out they still require the lender to use the monthly debt in the income to debt ratio.  So this is a hurdle you will need to overcome. 

From what I learned only the big banks do DHHL loans… not sure if this is true since I didn’t call all of them.  Central Pacific used to do them and no longer does.  Bank of Hawaii, First Hawaiian Bank might.  So far only HomeStreet seemed to have the best insight; however, call Tom since whoever my client spoke to earlier didn’t seem to know much and gave out wrong information.