Hawaii Life Real Estate Brokers » First Time Buyers

Housing Affordability on Maui Hovers Near Record Levels

Loren E. Clive, R(B) — Sat, 26 Nov 2011 00:30:30 +0000

Just a friendly reminder, housing affordability is “near its highest levels in more than two decades.” This means not only first-time home buyers are taking advantage; there’s also folks buying up investment properties as well.

Looking for a perfect opportunity on Maui? Consider a starter condo at Kihei Villages (MLS# 349021) or Southpointe. With market value hovering in the $130K range, an investor could purchase in this complex, rent the unit for $1,000 monthly, and sit back and let the property carry itself.

This scenario works best with cash purchases, but depending on your credit rating and interest rate, might also work with a conventional 30-year mortgage. Check with your lender.

Those looking to take advantage of the historic low prices should buy now and wait for long-term appreciation. Or, as one of my clients recently did, buy now with the goal of retiring on Maui in a few years, when prices will most likely be higher.

Questions about real estate investment? Give me a call.

Kamakoa Nui Model Homes Open and For Sale in Waikoloa Village

Catherine Klug, RS — Mon, 21 Nov 2011 23:40:59 +0000

Kamakoa Nui affordable housing project will be offered at prices much lower than anticipated. “Prices will range from $240,000 to $325,000—far from the project’s original concept and designs that set prices from $385,000 to $495,000,” said Mayor Billy Kenoi last Friday, November 18th, 2011 during the Kamakoa Nui model homes blessing.

Also differing from the original concept that offered the homes as leasehold, “buyers will have the chance to assume full ownership of the home and land after 15 years,” Kenoi said. If sold before 15 years, any windfall profit must be shared with the county. The 15-year requirement is a means to discourage speculation and keep the homes affordable.

How To Qualify For a Kamakoa Nui Home

Buyers must live within a 30-mile radius of Kamakoa Nui
Buyers must have an income of 70 percent of the area’s median income
Buyers must commit to living in the homes
Buyers can not have owned a home in the past three years, according to the county

About Kamakoa Nui

The first increment of Kamakoa Nui will comprise 91 homes, including 68 one and two-story homes and 23 bungalows. Developed by Hawaii County, ultimately the project will include 1,200 rental and for sale homes on 268 acres. The community’s overall infrastructure includes:

sewers
roads
street lighting
sidewalks
other utilities
the model homes and office
a 12-acre park

The first of the homes to be offered for sale are expected to be completed late summer or early fall 2012. The workforce will be built in groups of six to eight bungalows and single family homes, which is expected to begin next month.

Kamakoa Nui affordable project is finally taking shape and I will make sure to keep you informed! I live, work, and play in Waikoloa Village!

3rd Quarter Market Update For Kauai – Business as Usual (For This Market Anyway)

Ron Margolis, RA, ABR — Tue, 18 Oct 2011 02:20:39 +0000

Aloha to all of you. As we enter the fourth quarter, typically not that strong a quarter in the island sales market, we take a look at the data from our 3rd quarter of sales on the island of Kauai. The information comes to us courtesy of Hawaii Information Services.

Monthly and quarterly, our MLS provides three key statistics:

Number of Sales—the total number of transactions in a given period.
Sales Volume—What is the dollar volume of business transacted? For instance, for the 3rd Quarter (July through September) there was $96,268,840 sold in the 3rd Qtr. of 2010, but only $75,734,504 sold in this same quarter in 2011—a decrease of 21.33%
Median Sales—This is defined as the number where there are an equal number of sales above and below this number. It is NOT the same as the average price. While the 3rd quarter sales volume was down on Kauai, year-to-date the total sales through September 30th on Kauai is $279,905,323. That $279K number is within one half of a percent of the total number through the 3rd quarter of 2010. For those of you who are not as familiar with our tax map key system, our island is divided into five zones, starting on our southwest side and working counterclockwise around the island. The map of our zones is below, so that you might better understanding the median value analysis to follow.

The five zones: Waimea • Koloa • Lihue • Kawaihau • Hanalei—notice the sections, the smaller numbers within each zone

Now, let’s take a look at the median prices through the 3rd quarter of the three different categories of property: single family homes, land, and condominiums. Through the end of September, there have been 268 sales of single family homes, 213 sales of condos, and only 70 parcels of land have changed hands. Land has typically been the softest component of the market and not every lender will loan money for land or the associated construction costs.

When you look at the median price of single family homes, you’ll notice there’s not a lot of change in the median prices in Waimea, Koloa, or even on the north shore in the Hanalei district. The median sales price of a single family home in the Hanalei district, from Kilauea all the way to Haena, is down a mere 1.03 percent, or basically flat.

On the other hand, the median prices in both Lihue and Kawaihau, the two largest population areas on island, are noticeably down from last year. This is mostly a function of the numbers of foreclosures and short sales, and those properties’ effect on value pricing in those towns.

In terms of raw land transactions, the biggest market adjustment is on our north shore; farm and mountain lots in Kilauea are selling for a lot less. Smaller lots in Princeville are selling for less too. In the area known to local residents as Queen Emma’s Bluff, lots which formerly sold for $600,000-$700,000 are selling for almost half of that. The last lot to close on that street sold for $345,000 and that was recorded on October 11, 2011. Sometimes though, as evidenced in the above graphic of the Waimea district, when there is only a transaction or two for a time period, one sale can have a dramatic affect on the pricing.

And in this final chart below, notice the dramatic adjustment in the median price of condos in both the Kawaihau district and the Lihue districts. The median price of a condo in the Kawaihau area, which includes all of Kapaa and Wailua, is down almost 24% from last year to a current median price of $127,500. And wow, how about the Lihue district where the median price is down a whopping 56 percent from last year at a median price of $65,000? Such a dramatic number, but do you know why? It’s relatively easy to explain those two dramatic adjustments.

For one, both the Kawaihau and Lihue districts have the highest foreclosure rates on our entire island, and the bulk of that shift in median price comes from the sale of Islander on the Beach units in Kapaa and Kauai Beach Resort units, which are technically in the Lihue district. Most of these condos were sold to investors and speculators at a time when investors and lenders asked way fewer questions.

At the Kauai Beach Resort, some of the mauka-facing units are selling for between $30,000 and $40,000 dollars. These are “condotel” units which sold back in 2006 for between $225,000—$325,000 dollars. The Islander units used to sell for $350,000 for oceanfront units. No longer. Prices at these complexes are down dramatically and are pretty much relegated to cash transactions. No lenders really want to loan on these condotels without kitchens, fondly referred to as ”lodging units.”

It is surprising that with interest rates in the low 4 percent range or even into the high 3 percent range, there is not an increase in sales volume from last year. However, the great rates and programs are making it more and more possible for local families to purchase their first homes, and get an affordable mortgage to go with it. That trend is not likely to change any time soon. Remember, our island and market are small.

Currently, one home in Hanalei Bay is listed at $18 million dollars. When that home officially records, that one sale will of course dramatically affect that number in the Hanalei zone. Still, the numbers don’t lie. The market is pretty much status quo and the largest amount of transactions occur below $300,000. That was not always the case. The market favors the buyers. If you are thinking this may be a good time to enter the home market as a buyer, you are probably right!

Resort Report – Mauna Lani Resort Sales

Dan Fumento, R(S) and Marion Fumento R(S) — Sun, 09 Oct 2011 21:45:41 +0000

We’ve been tracking sales in the Mauna Lani Resort, year-to-date. The graph below shows the number of condos sold per month in 2011. Of the 3 sales recorded in September, 2 were short sales and one was a resale.

The graph below shows the median sales price for the same period:

As of the date of this blog, there were 47 active condo listings in the Mauna Lani Resort at a median list price of $799,950. While the activity (# of condo sales) clearly shows a down trend year-to-date, it is interesting to see the median price graph holding steadier. We will revisit these graphs every month to see where the trends are leading.

Historic Time to Buy on Kauai, HI – Lowest Interest Rates in 50 Years

Hawaii Life — Wed, 05 Oct 2011 06:30:59 +0000

When discussing real estate on Kauai, many buyers I speak with are interested in buying the nicest, lowest priced home for the lowest interest rate possible. Many people are waiting for the “bottom to hit” to insure that they pay the best price and best rate for their piece of paradise, but what if the bottom has already hit?

Historical mortgage graph courtesy of Old Republic Title Company (www.ortc.com)

According to the loan officers that I work with and BankRate.com, these are historic times we are living in, and the national mortgage rate is at an all time low. This is excellent news for people who have been waiting for the “right time” to buy their piece of paradise and finally own a home or land on the idyllic island of Kauai, Hi.

According to a recent article from www.BankRate.com, “This might be the low…another reason to act now, instead of waiting, is that lenders keep tightening their standards—and, at the same time, house prices are falling. The combination of more stringent lending and falling prices can push homeowners out of the category of people who are eligible for loans and into the category of people who are ineligible.”

This is excellent news for those of you who are waiting for the “green light” to go ahead and make a move on the home or land you have dreamed about. As I have posted previously, it is my professional and personal opinion that purchasing a home and land on Kauai is one of the most sustainable, long-term investments.

With interest rates being as low as they are, there are ways to make your investment work for you and even make a healthy yearly profit, like owning an active vacation rental on Kauai that already has year-round bookings. So, if the experts are saying this is an excellent time to buy…what are you waiting for?

Please contact me today for more information about current homes and land on Kauai that are in your price range.

Mahana Dunn, (RA)
mahana@hawaiilife.com
(808)-280-3327

Buying a Pre-Foreclosure Home at a Discount on the Big Island – What Are Short Sales?

Pat Strausse, RB — Mon, 03 Oct 2011 20:50:30 +0000

Are you a buyer looking for a great deal on a house? Do you want to buy a house at a pre-foreclosure savings sale price? If so, buying a home that is a short sale might be the ticket, but know first, that short sales ARE NOT for all buyers.

Not all short sales close, and the ones that do close can be frustrating experiences. You need to know up front, that at most times, you will have no control, and the bank will have all control. The bank will dictate rules for you to follow, and then do whatever it so pleases whenever it pleases.

If you have to have a home in a specific time, DO NOT do a short sale. There is no way to tell when you will close on a short sale. Some loans require a home be in good condition and many short sale homes don’t pass the test, but there are some great deals to be found in short sales. Most of my business today is either short sales or REOs (the bank owned properties after foreclosures) and I have learned how to negotiate with the banks throughout the entire process. You just have to know it’s really the bank’s game and be willing to play in their ballpark.

A short sale happens when a sale price is not enough to pay off a mortgage and the seller is in financial hardship and can’t make up the difference. This sale would be short of paying off the mortgage and is called a short sale.

A short sale is anything BUT short when it comes to the time it takes to close one. When it comes to the time to close on a short sale, they should actually be called a long sale…or maybe even an endurance sale! You need patience and you also need to know that not all short sales close successfully. Knowing the steps in a short sale and understanding how they work will help you on the road to closing on a short sale.

Here are the steps in a short sale:

Meet with a lender first—you usually need to submit a pre-qual or pre-approval letter with your offer. If paying cash, you will need to submit proof of funds, so have that ready.
In viewing properties, don’t exclude homes that aren’t distressed properties. Sometimes, the best deals are found with a seller that has equity in the property and is motivated to sell. The closing process is way easier also.
But, if you are going for a short sale, remember that you will be taking this property “as is” and if you are getting a loan, it must be able to qualify for the loan. Some homes will only be able to be bought with cash. Finally, some homes are stripped of appliances, so you may need a budget for replacing these.
When you have found a property, consult with your agent and make your best offer first. A good agent will talk with the listing agent and find out details on the seller (taxes due, liens) before writing the offer. The offer will first go to the seller, who will usually accept the offer unless it seems impossible for the bank to accept. After the seller accepts the offer, the contract goes to the bank.
Now the wait begins. Your agent should pull up a title report at this time to see what liens and taxes are pending as you will be responsible for these. If it is a condo, you will also need to know about any HOA’s due. Bank response time can be one week to several months. When you do hear from the bank, you may get an email from the listing agent saying the bank would like to counter your offer, or may even say they are accepting it. Don’t get too excited yet. Until you have the bank’s written approval letter, you have nothing. I had one short sale where the bank countered my buyers in emails twice after they had accepted each previous counter, and if the seller has a 2nd lein holder, you will have to wait for approval from that bank also.
Banks written approval starts the clock on closing. Usually, you have 30 days to close and your contract has all dates referenced to the bank approval date. Now you need your loan approval to FLY! Please don’t try this with a mainland lender. This is the time for a local lender.
Even though you are buying as is, now that you have approval, you will want to do a home inspection, termite inspection, document review, and maybe staking/survey. These will all be at your cost and need to be done quickly. You do have these in your contract as contingencies to cancel if you find something of concern.
You will receive from the seller a standard Hawaii seller’s disclosure statement detailing any known problems with the property. This is one major advantage of buying a short sale vs. a REO because a bank does not provide a disclosure to you.
When it is time to sign your closing documents, you will receive a HUD 1 that will show any payments you pay that the seller was behind on or other liens. You should have seen all of these previously in the title report. This is the one major area of buying a short sale that you need to consider.
Now it’s time for the seller to sign off on seller paperwork. Sometimes, the bank will ask the seller to pay in and the seller will refuse, or be unable to pay, and the sale ends there.
If all goes well after signing, the sale will record. What could go wrong at this point? Believe it or not, there have been stories of large banks foreclosing on homes just prior to them closing on a short sale. One department not knowing what the other was doing. But, you have played the bank’s game …and you are a winner! Congratulations on the successful closing on your short sale! When’s the housewarming party?

I love the Big Island! Aloha.

Don’t Let Hawaii Vendor Liabilities Become Your Liability

Catherine Klug, RS — Fri, 30 Sep 2011 23:43:57 +0000

Clients recently closed on a town home at Waikoloa Colony Villas and just came back to enjoy their property for the first time as theirs…now it is time to add new colors, to remove old carpet and replace it with wood flooring, to purchase new furniture, and make it their own sweet vacation home. They didn’t want to take on this project, so they called me, real estate licensee, and asked, “Who would you recommend?”

As much as I want to be of service to my clients, I don’t want to place myself, or them, at risk with recommending or hiring contractors, painters, or plumbers that are not properly licensed in the State of Hawaii.

Why? Persons engaging in contracting without the proper contractor licenses are in violation of Hawaii Revised Statutes, (HRS) 444-9. Persons operating without the proper contractor’s license are not playing by the same rules as licensees.

My clients understood all of the above, however, they could not stop thinking that if I could refer them an unlicensed contractor they could probably perform the work cheaper and faster. So, I had to bring up another issue: what if this contract worker suffered an injury working on their wood floor project?—And they may not have realized that I could be involved too.

If that injured contractor was not insured, then it could involve an expensive lawsuit. There are a variety of ways a construction contract can go wrong, resulting in a complaint about the unlicensed contractor, and me, as the person providing the referral.

So, finally, my clients asked the 2 following questions:

1. How do we know if my contractor is licensed? Finding out if a contractor is licensed isn’t very difficult, check out the Hire a Licensed Contractor webpage at www.licensed.contractorhawaii.gov.

2. How do we know if my contractor is insured? This is definitely a vetting step that no one wants to skip. Make sure the vendor has commercial general liability insurance and worker’s compensation. At a minimum, the general liability insurance policy will cover advertising injuries, personal injuries, bodily injuries, and property damages.

If, after closing a transaction, my clients need to undergo some remodeling, repairs, or possibly even an expansion, I made a list of approved vendors that are both licensed and have shown proof of insurance. This is the only way to fulfill my duties to clients and to protect myself.

Buyer’s Tip for Sight-Unseen Purchases of Homes For Sale

Claire K. Bajo RS — Wed, 21 Sep 2011 01:20:34 +0000

Have a Realtor Video Tour the Property For You

Aloha! As a Realtor, my main priority is to be your fiduciary (trusted representative who works in your best interest), and one of the things I offer as a service to my clients is to video preview a property for sale—especially if you are considering buying a home in Hawaii sight-unseen, or without physically walking through the property yourself (a common thing to do when someone sees a home they like and aren’t able to make it to the islands yet).

What I like to do is to video record the property preview, so you can see the unedited tour of the property. Because it will be in raw footage form, you will be able to see the actual details of the drive to the property, along with the weather that day, the sounds of the area, and then the detail of the property from a Realtor’s perspective or point-of-view.

Here’s a typical video of a property tour I did for a client who will be here in December, but wanted to check the temperature of the market and the quality of homes for sale. This home for sale (MLS# 244480) is in Tarpley Subdivision, Waimea, Big Island.

I also take pictures of the property and special features that may add value, or show you the areas that may need repair or possible replacement. Since most sight-unseen buyers may not walk through the property until after it’s closed, it’s best to have an experienced Realtor who can point out the details and features of a property.

This spacious sun room shows to be a little dated, though in good shape. The windows will need to be scrubbed of the weather deposits collected and new window coverings will need to be custom ordered for this room.

It was about 10:30 a.m. and this area of the home was about 90+ degrees…but this heat may also contribute to heating the whole house in the evening, which can get as cool as 60+ degrees at night outside in this particular area of Waimea.

The kitchen area also needs to be upgraded. Though there was some nostalgia to the ambiance of the house—for the price, there was much to be re-done. Some properties might update their homes prior to putting it on the market to get the best opportunity at the highest market value. In this case, because it does need updating, we consider taking those upgrade costs off the list price at negotiations.

As you can see in this video, many parts of the home need to be updated. See if you can pick out the areas that need updating.

There are lots of beautiful features about this property, especially the fact that it’s nestled on 12+ acres in Waimea, just minutes from town and conveniences. The upstairs of this home felt like I was in a “Little House on the Prairie” episode, with some cute features—but upgrades were needed as well.

The guest house was cute and cozy, and could be used as a vacation rental or bed & breakfast type situation—but it also needs upgrades. Both homes are made of cedar, so they seemed sturdy, but because of the Waimea weather and the age of this home for sale, a home inspection would be recommended.

There are also other buildings on this property along with fencing—a weathered stable, a dog kennel, and a fenced area that was used as a helipad for the current owners.

The landscaping near the main house was tropical and very pleasing to the eyes, and does add value and curbside appeal for this home for sale.

I will also record the drive out of the property (especially in this case—for properties with long driveways or easements), just so you have an idea of the experience you will have coming home and leaving home.

If there are any other items that you may have seen from the video tours that I can research for you on any property, or if you feel the home requires more due diligence investigations, please let me know and I would be happy to look into it for you! I hope this helps you in your decision-making process and please let me know anytime you see a property that interests you!

Blessings always and I look forward to showing you around…or in this case, video touring homes you may be interested in before you get here!

Please keep in touch if I can be of assistance to you~

Claire K. Bajo, RS
(808)-756-4874
Claire@hawaiilife.com
www.HawaiiLife.com

Why Should I Use a Hawaii Buyer’s Agent – Part 3

Kelly A. Lee, R — Tue, 20 Sep 2011 23:20:30 +0000

Hawaii Real Estate Buyer Tips—Part 3.

This is a continuation on my blog series on selecting a buyer’s agent and purchasing Hawaii real estate. Many times, people start their search for a home before they know if they can buy a home, or how much house they can afford. It is important to know what you want and how to get it.

Life is too short to waste time going down a path that leads nowhere. If you set the path, or have your agent help set up the path, you are much more likely to get where you want to go. We went over these questions on my last blogs on the subject.

Here are the links to my previous blogs on this subject, part 1 and 2:

These are the rest of the questions and answers:

How do I navigate through the process with inspectors, escrow, agents, loan officers, appraisers, and all the other professionals involved in the transaction?
What is HUD and why do I hear people talk about that?
What kind of fees will I have to pay?
What are the differences between escrow fees and loan fees?
Why do I have to pay these fees?
How much down payment do I need?
Who do I talk to about all this stuff?

8. How do I navigate through the process with inspectors, escrow, agents, loan officers, appraisers, and all the other professionals involved in the transaction?

The best way to navigate the process is to have a buyer’s agent assist you in the entire process from finding the property, getting pre-qualified, and finding the necessary inspectors to closing. An agent can help you keep it all on schedule since this is what they do everyday, all day.

9. What is HUD and why do I hear people talk about that?

The HUD statement is a closing statement that is given to both buyer and seller at closing, which reveals in detail what the costs are associated with purchasing property. This document must be prepared and provided to all buyers and sellers of Hawaii real estate. This document helps protect consumers from any “hidden fees,” or surprising costs at the closing table.

Your real estate agent should get a copy of this report as well, so that he or she can make sure that it is compliant with the purchase contract. The HUD is created by the settlement company (Title and Escrow) involved in the transaction. Make sure you keep a copy of this form for your tax preparer at the end of the year.

10. What kind of fees will I have to pay?

There are many fees that need to be paid during and at the closing table of a real estate purchase. You don’t want to be blindsided by a request for thousands of dollars for closing costs. You can use a mortgage payment calculator to give you an estimate of the loan payment, but the loan payment is only what you pay after closing and usually does not include all the fees that you will be responsible for. Here is just a partial list and you can ask your agent or loan officer to see a sample HUD, which can show what to expect.

Points: you hear 4% and 2 points. The 2 points are fees for the loan expected to be paid at closing and each point is one percentage point. $100,000 mortgage—2 points is $2,000. Appraisals, property inspection, taxes, transfer fees, insurance, escrow fees, attorney’s fees, settlement fees, prorated association or maintenance fees, the list goes on. Be sure that prior to starting your home search, you have an estimated idea of how much money you will need to bring to the closing table. It is best to have this all figured before you start your search for a home.

11. What are the differences between escrow fees and loan fees?

There are 3 professionals that work with you from the beginning of your search until the keys are in your hands. There are many other professionals that advise and assist along the way, but these three are there every hour of everyday of your home buying journey:

Your real estate agent who helps you locate the home, negotiate purchase contract and contingencies, manages the process, and assists in analyzing the property and terms.
Your loan officer who will pre-qualify you for a loan, take your application, and assist in getting the money needed for the purchase.
Your escrow officer will hold deposits and monitors compliance by both buyer and seller in adhering to the agreed upon written contract.

Numbers 2 & 3 are two separate entities with two separate jobs, so they each have their own fees for services. They will gladly give you an estimate for those fees once they know which property you will be pursuing.

12. Why do I have to pay these fees?

The plain truth is that in a real estate transaction, there are often dozens of people who handle each part of one real estate transaction. There are many reasons for these fees, but plainly, it is for profit and salary. Everyone who has a hand in your transaction has a family and earns a living by being a part of the real estate transaction. Each company has a responsibility to their owners or shareholders to provide a service and earn a profit.

These are professionals that often deal with hundreds of transactions a year and this is how they earn a living and provide a service. Buying a home is complex and involved. There are many facets of the transfer of property. At closing, as a buyer, you are usually looking at a cost of 3%-4% of the sales price as your costs associated with having all these people contribute to the successful purchase of your investment.

13. How much down payment do I need?

This is an excellent question when buying a home. It would be heartbreaking to search for a house, find the house, and then find out that you do not have enough money to get it. This is why it is important to talk to a loan officer prior to starting your search. Sure, you can browse for houses, but if you really want to start on that road to home ownership, you want to know how much money you need and how much house you can afford.

Although, the easy 100% financing loans for anyone with a pulse are a thing of the past, it is likely that you will need to have some money saved up for a down payment. There are exceptions to the 20% down standard. There are USDA loans, VA loans, and several others that fit into a program that may allow low to no money down. Your Realtor or loan officer can help you find out which loan and property best fits your current situation, both financially and with your housing needs in mind.

14. Who do I talk to about all this stuff?

That one is easy. Call your Realtor. They will guide you through the entire process and assist you from beginning to end. If you do not have a Realtor, I can assist you on the island of Oahu. If you need an agent on another island—I know some very good ones on every island. Call or email me and I will point you in the right direction.

Those are the most common questions we get when a client is starting their search for a home. The process of buying a home is completely different for everyone, but the tools and professionals are available to assist you.

To ask me your real estate questions, email me. To continue browsing for Hawaii Real Estate, click here.

Kelly A. Lee, (R) e-PRO, CHMS
Realtor-Broker
Hawaii Life Real Estate
4614 Kilauea Avenue, Ste. 206
Honolulu, HI. 96816
Phone: 808-225-0349
Fax: 866-590-3144
www.hawaiilife.com

Why Should I Use a Hawaii Buyer’s Agent? – Part 2

Kelly A. Lee, R — Sat, 17 Sep 2011 00:30:34 +0000

Hawaii Real Estate Buyer Tips—Part 2.

It is important to know what you want and how to get it. Life is too short to waste time going down a path that leads nowhere. If you set the path or have your agent help set up the path, you are much more likely to get where you want to go. We went over these questions on my last blog.

Here are the next few question I wanted to cover:

How much house can I afford?
Will my payment go up over time?
How do I choose a lender?
How long will it take?

4. How much house can I afford?

This is a very important thing to know. We saw an incredible number of homes being bought during the boom years of 2005-2007 that were much bigger and more expensive than necessary. Too many times, what you qualify for and what you want to spend are 2 totally different numbers.

Many people “qualified” for homes that would soon gobble up 50%-75% of their income—especially when they went for the 2-year adjustable rate mortgage. It would seem reasonable at the time, but 2 years later, that payment would jump an exorbitant amount and that dream home became a nightmare.

There are many factors that come into consideration. How much of a down payment you have will affect what your purchasing power is. There are also many other factors to consider: maintenance fees, association fees, taxes, private mortgage insurance, closing costs, escrow fees, and repair costs.

This is a good topic to discuss with your Realtor and loan officer prior to starting your search. Nail down the price range and then start house hunting.

5. Will my payment go up?

Most people think about their purchase as affordability at the moment in time of their purchase, and if they get a fixed rate mortgage, their payment will remain constant. That is not true. Although the loan payment might remain constant, things like taxes, maintenance fees, and association fees can increase over time and sometimes significantly.

One of my investment condos maintenance fee was $210 per month in 2005 and now it is $375 per month—association fees were $25 and are now $75, taxes were $45 and are now $88. That is an increased cost of $258 per month—that can add up to a large chunk over the years, so keep these things in mind when looking at what you can afford and will the payment go up.

6. How do I choose a lender?

That is big question when buying a property, and again, there are many things to consider when deciding who to borrow money from—they do not all work the same way from processing to customer service to rates and closing costs—these are just a few of the things you will be considering. A great place to start is with the banks you already bank with. You may already have an active relationship. It is often nice to have an individual to talk to about your loan rather than a random servicer overseas.

Often times, if you have a mainland lender, they may not be familiar with Hawaii real estate and they may have lending guidelines that do not work well in Hawaii. Rate is not the only item you want to look at—cheaper is not always better.

If you do not have a lender, your Realtor has likely worked with several and can give you some information on which ones are good at what. The lending sea is endless and in order to wade through the litany of banks and lenders, a mortgage broker may be able to weed through the programs to help you find the one that is right for you.

7. How long will it take?

That is different for everyone. If you have your pre-qualification letter and know which area you want to live in, you could be in your home within 45 days of the starting line. The better the laid out plan, the faster the process. Sometimes, you have to sell a property to buy the new one and that process can be laid out so that the transition is as smooth as possible. Those time frames may be longer depending upon your particular situation.

With some homework done up front, it can be quick or laid out over a long period of time depending upon your needs. Everyone is different about how they want to approach buying a home and a good buyer’s agent can show you alternatives that suit your needs, so that the time it takes is unique to you.

The process of buying a home is completely different for everyone, but the tools and professionals are available to assist you.

Stay tuned for the next installment of “Why Should I use a Hawaii Real Estate Buyers’s Agent.” To ask me your questions, email me. To continue browsing for Hawaii Real Estate click here.

Kelly A. Lee, (R)

Kelly A. Lee, (R) e-PRO, CHMS
Realtor-Broker
Hawaii Life Real Estate
4614 Kilauea Avenue, Ste. 206
Honolulu, HI. 96816
Phone: 808-225-0349
Fax: 866-590-3144
www.hawaiilife.com