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Thinking About Buying Your First Home?

Thinking about purchasing a home of your own? Keep these critical considerations in mind:

How long you plan to live in the home.
If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home. The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

How long the home will meet your needs

What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

Your financial health - your credit and home affordability.
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it's within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a "home affordability" calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

Where the money for the transaction will come from.
Typically homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

The ongoing costs of home ownership.
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

The Loan Process
Get your documents & finances in order.
Get pre-approved to determine how much you can borrow.
Work with our loan officers to find the best mortgage for you.
Close your loan and settle

1) Get your documents & finances in order.

You should start with reviewing your credit report. Your credit report will be used by your prospective lender as a measure of how you manage your finances. Good credit gets you better rates and a stronger negotiating position for terms. Most people are surprised at their report’s contents because errors in reporting are common. Now is the time to clean them up.

Also provide the following:
Copy of two recent pay stubs the two most recent W2s
(If you are self employed, you need two years of tax returns and a YTD profit and loss statement)
Provide a copy of your current mortgage statement
Verification of any additional income
A copy of your homeowner’s insurance policy
A copy of your deed
Current loan provider
For a home equity loan, provide a copy of the note on your first mortgage.
Title information
Tax verification information
Previous property assessments, if applicable
If you own any rental property, provide copies of the rental agreements and two years of tax returns
Letter from employer stating date of hire, position, salary and year-to-date earnings
Current value of your house
Outstanding loan amounts
Three months bank statements for each bank, IRA/401K, stock and mutual fund account.
Co-borrower information
Provide a copy of divorce decree if applicable.
If you are not a US citizen, provide a copy of your green card (both sides)
If you are not a permanent resident provide a copy of your H1 or L1 visa.

2) Get pre-approved to determine how much you can borrow.

Once you get qualified you will have a good idea of how much you can afford. A pre-qualification gives you a no obligation quick and easy idea of what you can borrow. It is a helpful and painless first step. Pre-approval verifies your income, credit and debts. This involves more time and expense but is very useful when making an offer on a property. Sellers will obviously consider an offer more seriously that is pre-approved over one that is of unknown backing.

3) Work with our loan officers to find the best mortgage for you.

Your loan officer will help you find the mortgage that fits you best. There are a lot of factors to be considered. How long do you plan to keep the loan? Would a fixed or adjustable rate mortgage be best for you? How many points should you pay? What other costs are involved? When should lock in your rate? Based on your needs and situation, your loan officer will show you which mortgage products work best for you including Fixed,ARM,Hybrid,FHA or VA loan products.During the whole process, we are there for you to answer your questions with our years of experience.

We will review your loan application and supporting materials with you to make sure that your loan package is correct and as strong as possible. Then we will shop your loan application package to several lenders to find you the best deal possible.

4) Close your loan and settle

As your closing date nears, your mortgage broker and real estate agent should check its progress on a daily basis, because staying on top of things means you’ll know immediately if there’s a problem that must be dealt with.

For your closing you should bring all of your documentation that you’ve used during the whole mortgage shopping process. At the closing itself, everyone involved in your transaction will be present (buyer, seller, closing agents and attorneys). You will sign the necessary legal documents, pay your closing costs and escrow items and receive your closing documents.

Now you receive your key, move in and celebrate!

Remember, you should never hesitate to ask questions. Ask what ever you need to so that you understand the entire process.

The Mortgage Process

The process of getting a mortgage is not only mentally taxing but can be very emotional as well. You want to cover all your bases but you’re committing to a property and a loan that you have to live with for some time. We are here to make your journey easier. You are welcome to learn at your convenience from all of our online reading materials but don’t forget that we are available to answer any question that you have about your mortgage search. You can reach us anytime at Contact Us.

We’ve put together this collection of online articles to help explain everything from the basics to some interesting and advanced topics.

The Anatomy of a Mortgage
A mortgage payment consists of PITI
P – Principal - The original amount of the money borrowed from a lender.
I – Interest - A fee charged for borrowing money.
T – Taxes - Property taxes paid to your local government.
I – Insurance – Home owners insurance on your property.

Mortgages Choices

Fixed – Fixed mortgages have a fixed term (like 15 or 30 years) and a fixed interest rate. The interest rate and term are fixed over the course of the mortgage and your monthly payment for the payment of principal and interest will not change during the term of the mortgage. Taxes and insurance can change so this may affect your total payment during the life of your loan.

Adjustable – An ARM (Adjustable Rate Mortgage) has an interest rate that will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down based on these interest rate changes.

The Down Payment
Many people believe that they need to put down 10 percent or even 20 percent for their down payment and that’s no longer true. There are many lenders that have loan programs that require 5 percent or less, including zero down. Way back when, the only zero down loans were from the Veterans Administration but fortunately those days are gone. If you think that you have to pay rent until you save up a 10 or 20 percent down payment, check with us. You’ll be pleasantly surprised.

Prequalification
You will want to get pre-qualified during your mortgage search. Prequalification isn’t binding but rather it gives you a ballpark idea of what you can afford. The lender analyzes your income, debt and credit history to estimate your maximum loan amount. Combine that with the money you have for a down payment and you have your maximum home price.

The next step is preapproval which verifies your income, debt and credit. Preapproval gives you the following benefits:

Knowing exactly what you can borrow. You will have an accurate commitment from your lender for the amount you can borrow.
Credit problem solving. You will know now, instead of while your offer is being evaluated by the buyer if you have any credit issues to be dealt with.
Stronger negotiating position. Sellers love preapproved buyers. They know your offer will not fall through and will treat you like the proverbial bird in the hand. This can help you negotiate a better price. 

Closing Cost

Closing on a property is a very challenging time for a would-be homeowner. Being informed, either through your mortgage broker, your real estate agent, or through self knowledge is the best thing you can be when going through this procedure.

A good real estate agent can help you tremendously. They should know the local market well enough to help you save money in whatever way they can. Since closing costs are handled differently in different areas, having a professional with experience in that area is your best bet. They can give you a better idea of what costs are customarily paid by the buyer, and which ones are paid by the seller.

The mortgage broker you deal with can make a big difference in your closing costs too. Have them show you several programs suited to your needs. There are lots of ways to structure closing costs based on your points and down payment.

After finding a property, you will want to get qualified by your mortgage broker. Your mortgage broker will send you a Good Faith Estimate within 3 days as required by law. A GFE is a list of your closing costs from your lender. There may be additional closing costs that the lender does not control, so always be prepared to pay for other items also. A good number to be prepared to pay would be to double the GFE amount.

Closing costs on average are from 3% to 5% of your loan amount, and the exact amount will be told to you the day before the closing. All closing costs are to be paid at the settlement of the mortgage loan.

There are two types of closing costs

• Non-recurring closing costs are the ones that you pay once and never have to pay again.
• Recurring closing costs you pay repeatedly over the course of your home ownership. These would be items like property taxes or homeowner insurance.
• Property taxes placed in escrow are one of the largest expenses at closing.

The following is an alphabetic listing of the items that may be on your GFE. Some items listed here may not be on your GFE.

	Loan Origination Fee (1% of the amount borrowed)		Wire transfer fee
	Loan Discount fee		Interest from the day of settlement to the date of the first mortgage payment
	Loan Application fee		Private Mortgage Insurance (PMI)
	Points to be paid		Hazard Insurance premiums
	Lender’s attorney fees		Property taxes from the day of settlement to the end of the tax year
	Buyer’s attorney fees		Settlement or closing/escrow fee
	Appraisal fee		Notary fee
	Credit Report		Title search & Title insurance to protect your lender
	Lender’s Inspection fee		Title insurance to protect you
	Mortgage Broker commission or fee		Recording fees
	Tax service fee		Tax stamps
	Processing fee		Pest inspection
	Underwriting fee

Your closing procedure will go smoothly when you are armed with the right information and guided by the right professionals. Good Luck & Happy Buying!

Fee Simple or Leasehold Ownership in Hawaii 

Fee Simple FS: Ownership of land and the buildings on such land (as opposed to leasehold where property reverts to the owner when the lease expires)

A Fee Simple (or fee simple absolute) is an estate in land a form of freehold ownership. It is the most common way real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property .

LEASEHOLD - LH
"Leasehold Condominiums" where the development is built on leased land ( based on Ground Lease contract between Landowner )Lessor) and Buyer(Lessee ).
Leaseholds are properties where an owner/landlord (Lessor) leases real estate to buyers (Lessees) for specific time periods. The lessee is permitted to occupy the property for the lease period and pays the lease rent.The lessee is also responsible for paying the property taxes,maintenance fees,AOAO or HOA fees,etc. The Lessee Does NOT own the Land!

LEASEHOLD - FA - Fee Available or FP - Fee Purchase
The Landowner's interest in LH property is called Lease Fee Interest. The Conversion of Leasehold Property to Fee Simple property involves purchasing of the landlord's leased fee interest(s) and/or any potential sandvich lease.The past average Fee Interest purchase for Waikiki 1 bedroom LH condo unit was $70,000 to $100,000

What to Know when Buying Leasehold Property in Hawaii

1.Check the time period remaining on the lease. Leases that started 50 or 99 years ago may be nearing the end of their lease terms. Leasehold property prices generally decline as their lease terms approach expiration. If you see a condo on the market for $50,000, it may have just a few years left on the lease.

2.Lease renegotiation dates. When a property was initially built, for example a building constructed in the 1960's, the monthly lease rent may have been $50. Periodically, the lease terms can be renegotiated, based on market values. The lease rent for that same property today might be $350 or more.

3.If you anticipate needing a loan for the purchase, check with your lender to see if they will make a loan on the property. Mortgage companies usually require that the lease be at least five years longer than the loan. For example, to get a 30 year mortgage on a leasehold property, the lender would want to see at least 35 years remaining on the lease term.

4.Find out if the lessor offering the fee simple interest. If the fee is available, what's the price?

5.Monthly lease rent. Find out how much it will cost per month. For Example: The Kahala Beach Honolulu condo $2,200+/m lease rent can cover purchase mortgage payments for $400,000 2 bedroom Waikiki or Honolulu Fee Simple condo.

6. Expiration of the Lease Most Common Outcomes:

1.The property reverts to the lessor. The lessee must surrender the property and move out by end of the lease period. 
2.The lessor sells the fee interest to the lessee and the lessee become the fee simple owner of the property.

Not all leaseholds are bad and vary from building to building. Long lease properties with cheap lease rent are good for rental investment cash flow or to control fixed  Hawaii housing expenses.

 Six Simple Steps to Ensure a Smooth Home Purchase

Buying a home can be an emotional, time-consuming, and complex process. There are a few things that you can do to help make the process go as smooth as possible:

1. Check your credit.
Before you apply for a home loan, regardless of your credit, it's a smart idea to obtain a copy of your credit report from the three major credit bureaus and review the information. If there are errors or things that need to be addressed, it's easier to address them before you have found a house, than after you have found a house and are trying to close your loan.

If you know that there are a few blemishes on your credit, let your lender know what they are, why they are there, and why you are a still good credit risk. Lenders look at your credit to determine how likely you will pay back the loan. If you had extenuating circumstances - like a loss of a job or medical bills - let them know so that they understand that it is not likely to happen again in the future.

2. Get approved before you buy.
An approval means that a lender has reviewed your credit history, verified your assets and employment, and has approved your loan before you have found a home to purchase. As long as the home appraises for at least the purchase price, the loan should close.

Getting approved also gives you an advantage over other buyers. Your firm approval makes it easier for you to negotiate on the price of a home, than a person who is not approved or is pre-qualified.

While getting pre-qualified may sound official, it is really just getting an idea of what you can afford. Its having a person plug in a few numbers that you give them - your monthly income and your monthly debt - and getting an approximate payment calculated. From the payment, the calculator can approximate the house price range that you can afford. No information is verified. Because your assets, income or credit is not verified, a pre-qualification has little value when purchasing a home.

3. Find a great buyer's agent.
Traditionally real estate agents represent the sellers in a transaction. When you are not working with a buyer's agent, they are less likely to negotiate the best price or contingencies for you.

A buyer's agent's job and fiduciary responsibility (meaning legal duty) is to you, the buyer. Before working with an agent, establish if they are a buyer's agent or a seller's agent. After spending a lot of time with a Realtor, it's natural to feel like you're a team. But if they are not negotiating for you, then they are not on your team.

Six Simple Steps to Ensure a Smooth Home Purchase

Buying a home can be an emotional, time-consuming, and complex process. There are a few things that you can do to help make the process go as smooth as possible:
1. Check your credit.
Before you apply for a home loan, regardless of your credit, it's a smart idea to obtain a copy of your credit report from the three major credit bureaus and review the information. If there are errors or things that need to be addressed, it's easier to address them before you have found a house, than after you have found a house and are trying to close your loan.

If you know that there are a few blemishes on your credit, let your lender know what they are, why they are there, and why you are a still good credit risk. Lenders look at your credit to determine how likely you will pay back the loan. If you had extenuating circumstances - like a loss of a job or medical bills - let them know so that they understand that it is not likely to happen again in the future.

2. Get approved before you buy.
An approval means that a lender has reviewed your credit history, verified your assets and employment, and has approved your loan before you have found a home to purchase. As long as the home appraises for at least the purchase price, the loan should close.

Getting approved also gives you an advantage over other buyers. Your firm approval makes it easier for you to negotiate on the price of a home, than a person who is not approved or is pre-qualified.

While getting pre-qualified may sound official, it is really just getting an idea of what you can afford. Its having a person plug in a few numbers that you give them - your monthly income and your monthly debt - and getting an approximate payment calculated. From the payment, the calculator can approximate the house price range that you can afford. No information is verified. Because your assets, income or credit is not verified, a pre-qualification has little value when purchasing a home.

3. Find a great buyer's agent.
Traditionally real estate agents represent the sellers in a transaction. When you are not working with a buyer's agent, they are less likely to negotiate the best price or contingencies for you.

A buyer's agent's job and fiduciary responsibility (meaning legal duty) is to you, the buyer. Before working with an agent, establish if they are a buyer's agent or a seller's agent. After spending a lot of time with a Realtor, it's natural to feel like you're a team. But if they are not negotiating for you, then they are not on your team.

Hire A professional Real Estate Agent 

A qualified, competent Hawaii realtor will help you navigate the myriad of decisions that arise when buying and selling a home in Hawaii. An  Honolulu agent provides value to the Hawaii homeowner in many ways:

• Pays for all marketing and advertising costs.
• Adds experience and expertise in all aspects of the sales process including marketing, financing, negotiations and more.
   
• Handles all showings.
• Brings a network of known, trusted real estate professionals. If your agent doesn't have the answer, he or she likely knows someone who does.
• Always has your interests in mind so you always have someone on your side.
• Can handle and advise on all price and contract negotiations.
• Provides you with all the possible options and opportunities without holding back.
• Gives an unbiased, realistic view of your home and your options. Unlike buyers and sellers, an agent has no emotional attachment to property.
• Has the knowledge to help you ask the right questions.
• Being a third party, potential buyers are more likely to tell your agent the truth about your home, even if it is unflattering. This objective viewpoint will help you make the necessary changes to get your home sold.
• Your time is valuable. A real estate agent allows you to spend your time how you want.

http://www.hawaiiloanofficer.com/75/Loan-Application

http://MlsBigIsland.com  Hawaii Big Island MLS listings

http://www.hicentral.com/hbr-stat.asp oahu sales index

http://www.hicentral.com/scripts/re/openarea.asp  Sunday open houses

http://doe.k12.hi.us/  Hawaii public schools site

http://www.hais.org/  Hawaii private schools

http://honolulurealestate.weebly.com/honolulu-real-estate-blog.html Best Realty Inc real estate blog

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