The Process of buying a home starts with a good foundation
BY LISA SCONTRAS
Not sure if you can afford to buy a home?
If fear is keeping you from purchasing your dream home, First Hawaiian Bank offers some simple advice to help quell your home buying jitters.
“The first step to buying a home is: get educated,” says Leonard Fernandes, vice president of the Residential Credit Center at First Hawaiian Bank. “There are classes for first-time homebuyers – and an annual Homebuyer and Homeowner Fair at the Ala Moana Hotel to be held on June 29.”
And for those who are more comfortable learning the ropes in the privacy of their own living room, First Hawaiian Bank’s website at fhb.com has a selection of user-friendly calculators aimed at helping borrowers get a feel for what loan products may work best for them.
“Online calculators help borrowers get educated and build confidence by allowing them to test out different scenarios,” Fernandes. “With so many different mortgage options, online calculators can help with everything from comparing mortgage options and terms to figuring out how much they are saving through other means, such as closing costs and tax savings.”
Let’s say you wanted an estimate of how much mortgage you may be qualified for? Or maybe you want to compare mortgage terms, to see what payments would be for a 15- or 20-year mortgage instead of the typical 30-year loan? At fhb.com, there are calculators that allow you to input your monthly debt obligations along with your income and learn how these may affect your monthly payment. Should you pay discount points for a lower interest rate? Which is better: a fixed or adjustable-rate mortgage? And how much tax savings will you generate with a mortgage? There are different calculators for each of these questions.
“These tools are an invaluable way for a prospective buyer to crunch the numbers, and see which way works out better for them,” says Fernandes. “It is a great way to see the benefits of different loan products and terms.”
In addition to needing enough money to comfortably afford the monthly mortgage payments, Fernandes reminds prospective home buyers of the need to plan to have enough income to pay for property taxes, insurance, and have enough resources leftover to make necessary maintenance and repairs.
“If you buy a condo, there will also be a Condo Association fee,” says Fernandes.
“Buying a home is the single biggest investment most people will make in their lifetime,” he adds. “It is a serious commitment and has to be well thought through.”
Getting educated will also include talking with a loan officer. This is when you can ask questions, discuss down payment options, such as FHA and VA loans, Rural Housing loans, mortgage insurance – explore options to purchase with as little as 3 to 5 percent down.
“Sometimes by talking to the right loan officer, you will learn about loan programs you didn’t even know were available,” says Fernandes.
Given your income, expenses, borrowing needs and credit history, your loan officer will educate you further about how much a mortgage will actually cost, find the loan product that works best for your circumstances, and most importantly, pre-qualify you so that you have a working knowledge of what price range you can afford before you start shopping.
Get your paperwork together – your most recent paystubs, your most recent W-2 tax forms, the last tax return you filed, two months of your most recent bank statements, and if you are self-employed, your last two years of business tax returns.
“You’ll also want to provide the documents that support the down payment you are willing to put into the purchase,” says Fernandes.
“Purchasing a home takes preparation,” he adds. “Setting a budget, getting your savings goal to build your down payment, and knowing about products like FHA loans, which is how I purchased my first home. You have to educate yourself on the loan options and home options. You need to put your resources together and make your Realtor and your banker part of the learning process.”
Considering today’s low interest rates, you might be surprised how much home buying power you have. But get started today – mortgage rates won’t always be this sweet.
WHAT YOU’LL NEED WHEN APPLYING FOR A FIRST HAWAIIAN MORTGAGE LOAN:
* W-2 Forms for the most recent two years
* Pay stubs or salary vouchers for the most recent full month with year-to-date earnings
* Bank statements for the most recent two months
* Most recent tax returns filed
* Year-end mortgage account statement (if applicable)
* Current Fire, Hurricane Insurance and Flood Insurance Policy (if applicable)
* Sales Contract – Deposit Receipt Offer and Acceptance (DROA) and any Addenda (if applicable)
* List of debt obligations