First-Time Homebuyers ~
ne of the largest growing segments of today’s local market is first-timehomebuyers. The current combination of a slow market and low mortgagerates has put homeownership within reach again. With an increase in inventory,less competition from other buyers, and motivated sellers, renters have morebuying power in 2009.Interest rates are still at historical lows, andif Hawaii’s real estate market is poised for arebound anytime soon, single and marriedrenters of all ages are determined not tomiss the boat again this time and aremotivated to discover what they can buy with the rent check they write every month.Buying a home is a long-term investment.Rents historically go up, but unless you’rethe landlord, that rent check is going towards building equity for someone else.Many renters are surprised and empoweredto find out how much house they canafford. This market gives them options.Sure, maybe that dream home isn’t in thebudget the first time around, but the peopleliving in your dream home probably startedout in something smaller too.It’s a smart time to buy. Not only have pricesstabilized and interest rates remained low,but for home purchases that close beforeJuly 1, 2009, first-time homebuyers may beeligible for a $7,500 federal tax credit.
Roles In Today’s Market
Your circumstances determineyour strategy to buy, sell or hold
Are you Credit Challenged?
For starters, make a resolution to goon a debt diet. The turmoil in thefinancing and credit industries hastightened lending standards — meaning lenders are scrutinizing everyone’scredit history like never before. But with interest rates still at historic lows, you can still get more house for yourmoney than you could several yearsago, if you can put yourself in ahealthy financial position. A poor credit history is notinsurmountable, however latepayments or too much debt canseriously jeopardizefinancing options.Building your home-buying foundationstarts with reviewing your credit score.Scores range from 500 to 850. Thehigher your score, the more options you’ll have. If it turns out that youhave credit problems, you can work on fixing them now. A good loan officer (if you need arecommendation, ask your Realtor)can offer advice on what can be doneto improve your credit score. You may need to have inaccuracies removed,pay down some debt, or go 12 months without being late with a payment.This may take a couple of months or itmight take a year.
Are you Cash Challenged?
This is not an uncommon problem,especially now when lenders havetightened their policies. Don’t haveenough money for a down payment?Get yourselfa good old-fashionedpiggy bank, make a commitment andsave for it.Cash-strapped buyers can also look into FHA and VA financing options,both with low down-payment require-ments. Other options include asking the seller to give you a credit for closing costs, go in on a hui with a friend orrelative, or make a rent-to-own offer. Ask your Realtor for other creativeoptions for your down payment.
“We were surprisedat how much wepre-qualified forand now, we areshopping for ourfirst home.”
1971 1975 1979 1983 1987 1991 1995 1999 2003 2008
Unless you’re planning to pay with cash,interest rates are a paramountconsideration. A one point increase cansignificantly affect your buying power.A look at where rates have been overthe last 30-plus years shows they areat historically low levels.
Source: St. Louis Federal Reserve Board