Six Important Tips for First Time Home Buyers
Important Information for Buyers
GET PRE-APPROVED BY A LENDER In today's market on Maui, it is necessary to see a lender PRIOR to shopping for a new home. Although low interest rates still prevail, they are expected to rise in 2018. Your lender will be able to verify your income to debt ratio, tell you your credit rating, suggest credit options, give you a pre-approval letter to accompany your offer, an of course, identify what your budget is for purchasing a home on Maui, giving you more confidence to shop. You will need to provide your last 2 years of income tax returns, verify the last 2 years of residency, verify your assets for the past 60 days and fill out a loan application. Note that the mortgage guidelines are stricter than they were from 2004 to 2008, but there are also many first-time home buyer programs available, so be sure to ask you lender of their availability and your eligibility.
FIND THE RIGHT PROPERTY As an Accredited Buyer's Representative. (ABR), and Short Sale Foreclosure Resource Certified, (SFR), we will assist you through the process of finding your Maui dream home or condo. We will negotiate on your behalf to get you the best deal possible on the purchase of your property on Maui. Having lived in Hawaii since 1988, we have an excellent working knowledge of the subdivisions and neighborhoods on Maui.
CLOSE THE DEAL If you have followed the steps above, these final stages of the home purchase should go smoothly. It is vital to adhere to all of the deadlines with the lender so that the loan closes on time. We will work with the escrow officers and guide you through the 14 page Hawaii Purchase Contract and Addendums, so that all of the contact contingencies are met and settlements are scheduled to be completed on time.
We will also include a FREE one year premium home warranty for choosing us as your agents. This will be our gift to you at the close of escrow. This one year comprehensive coverage will meet all of your homeowner needs and concerns. For more details, please visit the Choice Home warranty website at: https://www.choicehomewarranty.com
1. Talk to Us
A good real estate agent is one who will find you a home. A great real estate agent is one that will educate you on the home buyer process, thoroughly understand your needs, and find you something that fits your goals in both the short and the long term. Effective real estate agents treat you as a priority, make sure you set your goals realistically after you're pre-approved, and dutifully guide you along the path to home ownership. No matter your financial situation, we will be patient and tenaciously look for targeted listings that fit your needs. Know that we are continuously working towards the goals you outlined to us from the beginning.
2. Get Pre-Qualified Sooner Rather than Later
Everybody's situation is different, and you need a mortgage that will fit your unique circumstances. When you apply for a loan, your lender takes into account your work history, credit card balances, debt to income ratio, and finds the appropriate lending program and incentives to help you get qualified. There are numerous options available based on your financial situation including Adjustable Rate Mortgages, VA or FHA government loans or fixed rate mortgages.
Many people are in a good financial position to buy a home and don't even know it. Getting pre-qualified will give you a price range and confidence in owning a home. Don't think you have to put 20 percent down on a 30-year mortgage, it's possible to put five percent down or even zero percent depending on what you're qualified for. Once you're pre-qualified it's easier to wrap your head around the idea of owning a home. It will also give you incentive to start looking and take advantage of historically low interest rates.
3. Define your Needs and Goals
Setting your goals and planning will save you a lot of time, money, and effort. Are you looking for short-term or long-term? Are you an investor looking for a hot neighborhood where home values are rapidly increasing? Are you looking to settle down with a family in a neighborhood with good schools? Defining your goals makes the search less stressful and the path to home ownership clearer. It will also help your agent find you homes that fit your needs, rather than guessing and checking. This is especially important in a market like Hawaii where there is limited inventory.
4. Don't Wait for the "Perfect" Home
You should get a home that meets all of your needs and goals, but remember the concept of "perfection" is a fantasy and not a reality. Your first home will not be a beach side mansion, so don’t get caught up trying to find the "right one". Set your goals then shop within your price range.
You may find the home of your dreams, but it's likely out of your price range. Then you may get stuck with a mortgage you can't afford or get your hopes up for an offer than may not be accepted. Make sure you don't have blinders on, get the best house for your price range and make it a home.
5. Leasehold vs. Fee Simple
The Hawaii real estate market is unique in that there are many leasehold home ownership opportunities available.
Fee Simple is home ownership as most people understand it. You're given a title to the property which grants you complete ownership to the land and any improvements in perpetuity. You can possess, use, destroy the land as you wish, as well as give it away or transfer ownership.
Leasehold gives the owner temporary rights to use the land. The buyer does not actually own the land and can only use the home for a predetermined amount of time. If the buyer of a leasehold property transfers ownership, the new owner only has rights until the end of the previous lease agreement. At the end of the pre-determined period ownership reverts back to the original land owner. There also may be restrictions or other provisions preventing improvements or changes to the property. Since Leasehold is widespread throughout Hawaii, first-time home buyers need to understand the differences and plan accordingly.
6. Get your Home Inspected
Congratulations! You're on the precipice of closing on your new home! Now it's time to make sure it's the home you think it is. Unless you're a certified general contractor with years of home building experience, hire a professional home inspector to take a look at the structural components of your potential new home.
The surface value may be outstanding, new kitchens, beautiful floors, incredible views, but if your foundation is crumbling and the plumbing needs work, the additional unforeseen costs will add up very quickly, and you may not be able to afford repairs. Ensure that the home inspection is part of the purchase contract. Otherwise you're new dream home could quickly turn into an unintended nightmare. Ask yourself, how much do you know about roofs? Not as Much as a Certified Inspector!