5 Financial Steps to Homeownership

homes0302_1Excited by the concept of paying a mortgage instead of rent, most first-time homebuyers recognize

the benefits of owning a home. They like the idea of painting, remodeling and fixing it up just the way they want it – whether that means planting a garden or even bringing home a new puppy.

While it’s tempting to jump in the car on Sunday to start house hunting, the secret to successfully buying your first home is having a sound financial plan. But before flipping to the Open House Guide, consider these five starter steps.

STEP 1: Talk to a mortgage loan officer or personal banker

It sounds obvious, but the one thing that you need to buy a house is money. First things first – take a hard look at your finances.

You’ll need a mortgage. If you don’t know a loan officer, ask your friends or start with a bank you trust such as

First Hawaiian Bank. First Hawaiian offers personal bankers and mortgage loan officers who are experts in walking first timers through the process of buying a home step-by-step. Your personal banker or loan officer is your first stop to homeownership.

“Your loan officer will help you to obtain guidance and a list of documents you’ll need to produce in order to prove income, assets, down payment, closing costs and reserves,” says Elina Grugier-Bell, Assistant Vice President and Manager of First Hawaiian Bank’s Mortgage Banking Department.

“It’s best to know what you can afford before you start shopping in order to look at properties that are within your price capabilities,” says Joy McLaughlin, Senior Vice President of the Residential Real Estate Division at First Hawaiian Bank. “You want to look for a personal banker or loan officer who is knowledgeable in all products – one who is looking out for your interests. At First Hawaiian Bank, whether you are a customer of the bank or not, we care about your financial well-being and we want to help you make the most informed decisions.”

STEP 2: Discuss products

Next, your loan officer or personal banker will discuss with you various product options – fixed rate, 15-year, 30-year, construction, ARMs and even the First Step Home Loan – and walk the buyer through each.

STEP 3: Credit check

“A credit score of 720 and better is always good,” says Grugier-Bell.

There are measures you can take to ensure your credit score is as high as possible. Your personal banker or loan officer can guide you if this is an issue.

“Among other things, you should be sure that all your bills are and have been paid on time,” says McLaughlin. “Any late payments will not only impact your credit score, but they may impact your eligibility to qualify for a loan.”

STEP 4: Supply financial documents

“Your personal banker or loan officer will provide you with a complete list of documents we need to review, which can include two years of tax filings, W-2s, current paystubs, asset statements, gift letters, and explanations of new credit or employment changes,” says Grugier-Bell.

“Be prepared to explain anything out of the ordinary, such as a recent job change or why income may not have been consistent return over return,” McLaughlin says.

STEP 5: Obtain pre-qualification

The next step is to talk numbers. Your lender will ask you how much you’re comfortable spending each month, followed by a series of questions about your income and expenses to determine exactly how much house you can afford and help you identify what money you have available for a down payment.

Your loan officer will use your income and expenses to compute for you a reasonable monthly payment and maximum loan amount.

Take the guesswork out of it. Based on the financial information you provide, your personal banker or loan officer will determine a loan amount. The process doesn’t take long and now you can be a smart shopper armed with the confidence of knowing how much you can realistically borrow. Happy house hunting!

The opinions, statements and views contained in this article are those of the author, and do not necessarily represent the views of First Hawaiian Bank or its management. First Hawaiian Bank does not warrant that the information herein is accurate, complete or current.

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