Archive for August, 2008

Buying a home can be a frightening prospect for any consumer, whether it’s your first home or your fifth. With so much at stake — your savings, your credit rating, your financial freedom – it can be difficult to sign on the dotted line, even if you want that home in the worst way.

So how can you determine whether or not purchasing a home makes sense for you? What’s the easiest way to examine the whole picture, from emotions to economics? With these 7 steps for success, you’ll be on the right path to homeownership:

Seven Steps for Success:
1) Establish your homeowner needs & wants.
2) Determine how much of a mortgage payment you can afford.
3) Get pre-approved by a lender.
4) Find the right real estate agent to help you.
5) Find a home that meets your needs.
6) Make an offer on the desired property.
7) Save as much money as possible on the transaction.

A mortgage broker or direct lender can let you know what specific loan programs would be best for you, as well as help you understand what criteria are considered to qualify you for the right home loan. You should be aware, however, that while many lenders can pre-qualify you, you might want to instead obtain a pre-approval, which is a financing commitment from the lender that will carry much more weight with your seller than would a pre-qualification.

Make sure you also inquire about the costs and time involved with any loan, as they will differ for each Lender. After settling on the right financing for your needs, the next step is finding a home that also qualifies for the desired loan. By the time you’ve done your homework and completed the suggestions in this report, you will have an excellent overview of how to find and buy your dream home. And you’ll have plenty of confidence to back up your decision to buy that special home, too.

Step One: Establish Your Needs And Wants
Begin your search for a perfect home by making a careful assessment of the kind of a home you need and want. I recommend that you take the time to do this in writing. Take the time right now to be as specific as you can about your particular requirements.

Step Two: Determine How Much You Can Afford
Set up a budget for yourself. Decide how much you can really afford to invest monthly for your house payment. Make sure you’re being realistic; most Lenders want your payment to be no more than 45% of your total monthly income.

Step Three: Get Pre-approved By a Lender
You can save yourself a lot of time and heartache by getting a pre-approval in writing from a Lender before you start to search for a home. Completing this step in advance will also give you an edge over other buyers during the offer process.

Step Four: Find the Right Real Estate Agent to Help You
You can learn a lot about an agent by just letting them “agent talk” to you about how they help buyers. Within a few minutes, you will probably be able to determine if their style is compatible with yours. Some questions you may want answered include:

1. Are they knowledgeable about the area of town and price range that you are interested in? (Some agents specialize in only one area or one price range.)
2. Do they have the time to work with us? (This is especially important if you’re on a tight deadline.) What procedure will the agent follow in working with you? How often will they update you with new property listings?
3. Can they effectively represent you as the buyer’s broker?

Ask as many questions as you can upfront. By finding a good agent, you will save yourself considerable time and effort.

Step Five: Find a Home That Meets Your Needs
While you may have heard about the exciting challenges of finding a house, nobody would ever claim the process to be easy. The following are some tips to assist you in finding the right property for you:

1) Keep an organized record of all your research data. Write down comments about the homes that you see. Keep track of your likes and dislikes.
2) Make sure your agent is aware of your time schedule and expectations. Do you like to look at one or two homes in a session? Four? Eight? Discuss this with your agent.
3) Tell your agent about any homes in which you’re interested, including homes you’ve discovered on your own time, or those advertised in the newspaper.
4) If you like to spend time driving around by yourself looking at homes, ask your agent for a list of “drive-bys” — homes to consider first from the outside. Your agent can make appointments later to show you the interior of those that appeal to you.
5) Express your likes and dislikes to your agent after you look at a home. Honest communication is essential; many buyers are reluctant to tell an agent what they really think of a property. Remember, the homes you will view don’t belong to the agent! You must be straightforward about your likes and dislikes in order for the agent to do the best job for you.

Step Six: Make A Purchase Offer on the Desired Property
Before your real estate agent can help you make an offer to buy the home that you want, it’s imperative to know beforehand exactly whom your agent represents. Since some agents work only on the seller’s behalf, that same agent may not be able to advise you what a fair offer to make is. By looking at what homes are selling for in the area and how long they are taking to sell, you should be able to get a good idea of value.

Step Seven: Save As Much Money as Possible on the Transaction
There are only two major financial commitments to consider when buying a home: the initial investment, which includes down payment and closing costs, and the monthly payment, which includes principal, interest, taxes and insurance.
How you can save on your initial investment:

1) Choose a low down payment loan. You do not necessarily have to put 20% or even 10% down. Qualified borrowers can pay 5% or even 3% down.
2) Have someone “gift” you the money to pay closing costs. A blood relative, church or nonprofit organization can give you money for closing costs.
3) Request that the seller pay some of your closing costs as part of your offer. Sellers are usually allowed to contribute to a buyer’s closing costs.
4) Avoid paying too much insurance at closing. Some lenders require 6 months or more hazard insurance paid at closing. However, keep in mind that any money left over after closing sits in your escrow account until you sell the house. Shop around for your home insurance. A little shopping can save you money.
5) You can deduct money paid for discount points from your gross income before computing your tax. See a CPA for more information.

Here are four ways to keep you monthly payments low:

1) Get a loan that doesn’t have monthly mortgage insurance premiums. You may be able to reduce or eliminate them by paying a little more at closing. By putting 20% or more down, you can eliminate them entirely.
2) Take advantage of rate-lock programs that are currently available. You can lock in a low interest rate 30-45 days in advance and protect yourself from any unforeseen changes in the marketplace.
3) Remember that interest payments on a primary residential mortgage are fully-deductible in most circumstances. Your property taxes may also be deductible.
4) If your particular situation warrants, choose an adjustable rate mortgage. Adjustable rate mortgages (or ARMs) can be up to 3% lower than “fixed” rates, and their adjustment periods range from 1 to 10 years.

Now that you have finished this report, it’s time to go out and find the home of your dreams! Good Luck and contact me if I can be of assistance.

I am often asked by my clients, “How much under the listing price should we offer?”

While this is an excellent question, the answer is often difficult to pinpoint. The main reason I emphasize the education phase for homebuyers is because ultimately that is the best way for them to understand property values. When you review and study 40-60 (or more!) listings, then drive by 10-20 and look at 5-10, you will learn to immediately recognize the “Hot Listings” as well as recognize the “dogs.”

Sellers price their homes using 4 basic strategies:

1. Ridiculously Overpriced

These sellers have listened to a real estate agent over-inflate the value of their home in an effort to obtain a listing. There is a natural tendency on the part of sellers to list with the real estate agent who promises them the highest sales price, which also explains the tendency of less scrupulous real estate agents to give the seller a high “value” in an effort to obtain the listing, sometimes overvaluing by 10-20%. These sellers may need a few months before they realize that their home is way overpriced as compared to others in the area. And the longer an overpriced home stays on the market, the more likely we can get the seller to face reality and sell at a lower price.

2. Slightly Overpriced

These sellers fall into 2 categories:
• Those that feel their home are worth every penny of their asking price.
• Those that want to leave a little “negotiating” room.
These homes, which can range between 4-10% overpriced, account for perhaps 75% of all homes for sale. Oftentimes, these sellers will reduce their price at the first sign of resistance on the market.

3. Fairly-Priced

These sellers have carefully and realistically studied other homes for sale, and they have priced their homes very competitively. These homes usually sell within 4 weeks at or very close to the listed price.

4. Attractively-Priced

These homes are deliberately priced below value, perhaps because the seller wants a fast sale or the real estate agent recommended too low of a price. Even with many competing offers, these homes usually sell within 7-10 days, at or above the listed price.

I hope this gives you some insight into the general nature of home pricing.

First-time buyers are often unsure about the financial aspects of buying a home, and you may have many questions swirling in your head. How much can I afford? Do I need a large down payment?

Your home price range will be determined by your income, credit history, the cash you have for a down payment and closing costs, and your debt. How much you earn compared to how much you owe will likely determine how much the bank allows you to borrow.

The financial rule of thumb is: your total monthly debt service, which will include your monthly mortgage, shouldn’t be more than about 36 percent of your gross monthly income. Most experts say that your monthly housing expense, including taxes and insurance, should not exceed about 28 percent of your gross monthly income.

Naturally, every situation is different, and each lender has different rules about working with buyers. A number of choices within your control can affect your monthly payment as well. For example, you might choose an adjustable rate loan, which has a lower initial payment than a fixed rate program. Similarly, a larger down payment may lower your monthly payment.

If you’d like more information about how much home you can afford, please call or email. I can help you get the mortgage information you need.

Five Simple Steps……

When you’re thinking about making a move, the first steps in the home buying process are:

1. Deciding when you want to make your move
2. Considering how much money you would like to spend
3. Thinking about what type of home you would like
4. Deciding where you would like to live

The next step is usually finding out how much loan you can qualify for and deciding the type of financing will work best for you.

If you’re in the “thinking about it” stage, you will want to speak with a lender about receiving pre-qualification. If you choose to become pre-qualified, the lender will determine how much you can borrow based on financial information you provide to the lender. Pre-qualification is useful for making preliminary decisions about how much home you can afford, but does not assess your creditworthiness.

You will need to fill out a loan application and go through the lender’s loan approval process at a later date. When you decide to buy a home, you will want to become pre-approved for a loan prior to beginning your home search.

Please don’t hesitate to call or email me for additional information about the buying process. My goal is to provide you with practical information as you consider your next move. And, when you’re ready to make your move, I’ll help you find your dream home and handle all the details of the transaction, so all you need to do is pack!

Oahu Homes Sales Fall in July While Prices Hold Relatively Firm

Prospective Oahu home buyers continue to be dissapointed with the frustratingly high home prices, while many home sellers are equally frustrated at the length of time now required to receive a quality offer to purchase their home……Something must give soon, either prices come down or buyers come to the table…….Only time will tell.

Home prices on Oahu dipped only slightly in July as the number of sales continued to drop in the double digits.

The median price of a single family home on Oahu was $620,000, which was a 3 percent decline from the median price for June 2007 of $640,000, according to the Honolulu Board of Realtors.

The median price of a condominium last month was $329,900, just 1.5 percent down from July 2007, when the median price for a condo unit was $335,000.

The number of sales, however, fell more than 20 percent in both categories, and the days on market has increased as well, to 52 days for a house to sell and 42 days for a condo, noted Dana Chandler, the board’s president.

There were just 251 homes sold in July, which was down 26 percent from July of last year, when 339 sold. It’s also in line with sales so far this year, which also are running about 26 percent behind the first seven months of 2007.

The number of condos sold in July was 365 units, down more than 20 percent from the same month in 2007, when 457 units sold. Year to date, sales of condos are nearly 27 percent lower than the same period in 2007.

Stay tuned.

The Pacific Business News reported this week that Hawaii ranked 40th in the nation for foreclosures in July, according to the latest report from RealtyTrac.

Hawaii as No. 45 in June.

Hawaii had 229 foreclosure filings in July, up 70 percent from June and up 169 percent from July 2007. There were 134 foreclosure filings last month and 85 foreclosures in July 2007.

Hawaii had a foreclosure rate of one filing for every 2,184 households, said the latest survey by California-based real estate research firm RealtyTrac.