Every purchase is different but this post will give you some idea of what you'll have to come up with during the purchase of your home.
The first money you'll put down is called an earnest money deposit. This is not to be confused with your downpayment. The earnest money deposit is typically $500 - $1000 although there is no set standard. I've been asked to make higher deposits to accompany my offers on properties and I've also read that one investor doesn't even make a deposit. In any case, this money goes towards escrow closing costs if your offer is accepted and gets returned to you if your offer doesn't get accepted.
At closing, you'll put down your downpayment. The amount of your downpayment is worked out between you and your lender during the escrow process and you should expect to show up at your closing appointment with a certified check (not a personal check).
At closing, you'll also pay the remainder of the closing costs which can be estimated to be 3% of the purchase price. You'll be getting a HUD statement prior to closing which will tell you how much the balance is. If there were any additional costs that arose during the escrow process it gets settled here. Closing costs are listed on your purchase agreement (the form you signed when you submitted your offer). Typical closing costs include escrow fees, taxes, inspections, legal fees, etc.
The following situation is not typical, but if for some reason you worked with a seller who was not willing to pay for realtor commissions, you'll be paying for it here as well. It will all be listed in the HUD statement. Keep your HUD statement for tax purposes.
There may be a remaining amount that escrow will hold to cover unexpected charges that come up after closing. Any unused portion will be returned to you within a few months.
Lastly, you'll have to find and purchase home owner's insurance. This is for flood insurance, fire, etc.
As you can see, the amount of what you'll need at closing varies depending upon the sale. It's a good idea to keep up with your lender, escrow agent, and realtor during the escrow process so you'll know what you need.
This is your year!
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Thursday, June 28, 2007
The 80/20 Rule for Mortgages
So what is the 80/20 Rule? That just meant that the buyer would give a 20% downpayment and carry an 80% loan. Mortgage loans have come a long way from having to put a 20% downpayment. No longer is the full 20% required. There are loans awarded with only a 10% or 5% down. FHA loans offer a 3% downpayment requirement.
A couple of years ago, loans were being given for 100-103% of the purchase price assuming a good credit standing. I haven't really seen much of these loans being advertised, but that doesn't mean that they aren't out there.
How does the 80/20 Rule apply to you now? If you take out a loan that is greater than the 80% you will most likely have to pay mortgage insurance on the loan. The insurance is meant to protect the lender in case you default on the loan. You will pay this mortgage insurance until you've paid the 20% (or in the case of FHA loans - 22.5%).
The main thing to get out of this post is that you don't need a 20% downpayment and be aware that there are costs associated with having less than a 20% downpayment.
The best thing to do is contact your lender to see what their terms are and what are the costs of the mortgage insurance and work with your realtor to find the home that is priced right for you. You'll need to factor in all these costs when making your purchase.
Just remember that nothing is impossible and this is your year to turn your dreams into realty!
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
A couple of years ago, loans were being given for 100-103% of the purchase price assuming a good credit standing. I haven't really seen much of these loans being advertised, but that doesn't mean that they aren't out there.
How does the 80/20 Rule apply to you now? If you take out a loan that is greater than the 80% you will most likely have to pay mortgage insurance on the loan. The insurance is meant to protect the lender in case you default on the loan. You will pay this mortgage insurance until you've paid the 20% (or in the case of FHA loans - 22.5%).
The main thing to get out of this post is that you don't need a 20% downpayment and be aware that there are costs associated with having less than a 20% downpayment.
The best thing to do is contact your lender to see what their terms are and what are the costs of the mortgage insurance and work with your realtor to find the home that is priced right for you. You'll need to factor in all these costs when making your purchase.
Just remember that nothing is impossible and this is your year to turn your dreams into realty!
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Types of Loans Available
Are you confused yet? As if there isn't enough to learn about buying a home, you also have to learn about banking as well. Well, I'm exaggerating... The truth is, there is a lot to learn and you should be an educated buyer so you at least know what you're getting yourself and your family into.
Here's a snipet of info regarding mortgages to get you started. There are several types of loans - 30 yr., 40 yr. (still very new), ARMs (in 10yr, 7yr, 5 yr, 3yr, and 1yr), interest only, balloon mortgages, and reverse mortgages.
All of these have various costs that differ from lender to lender. Costs include the interest rate you'll be paying for the loan, points and possibly even a loan fee.
30yr fixed mortgages generally have the same interest rate for 30 years. I would imagine that the same is for the 40yr, but you'll have to do your own research for that one.
ARMs are short adjusted rate mortgages which means that the rates change at you guessed it - 10yr, 7yr, 5yr, etc. - you get the idea.
Interest only loans means that you pay interest only up front which seems cheap, but the rates can change quickly so don't be deceived. Because of the problem we had earlier this year with subprime lending in the form of ARMs and interest only, they may have stricter lending requirements. I've heard that they aren't even being offered and yet, I seen so many ads offering these loans. If this is the loan for you, it'll probably be best to ask your lender what's available when the time comes.
Balloon payments have a huge "balloon" payment at the end of the loan term.
Reverse mortgages basically pay you assuming you have considerable amount of equity in a property you already own. Let's just say for now that this doesn't really apply to our situation.
With all that being said, a lender could offer one or more of these loans. Take some time to watch the ads in the real estate section of the Sunday paper. See whose offering what at what interest rate. Don't be shy in calling them to inquire about the loan. Find out what the terms are and how you can qualify for the loan. The terms you're interested in are:
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Here's a snipet of info regarding mortgages to get you started. There are several types of loans - 30 yr., 40 yr. (still very new), ARMs (in 10yr, 7yr, 5 yr, 3yr, and 1yr), interest only, balloon mortgages, and reverse mortgages.
All of these have various costs that differ from lender to lender. Costs include the interest rate you'll be paying for the loan, points and possibly even a loan fee.
30yr fixed mortgages generally have the same interest rate for 30 years. I would imagine that the same is for the 40yr, but you'll have to do your own research for that one.
ARMs are short adjusted rate mortgages which means that the rates change at you guessed it - 10yr, 7yr, 5yr, etc. - you get the idea.
Interest only loans means that you pay interest only up front which seems cheap, but the rates can change quickly so don't be deceived. Because of the problem we had earlier this year with subprime lending in the form of ARMs and interest only, they may have stricter lending requirements. I've heard that they aren't even being offered and yet, I seen so many ads offering these loans. If this is the loan for you, it'll probably be best to ask your lender what's available when the time comes.
Balloon payments have a huge "balloon" payment at the end of the loan term.
Reverse mortgages basically pay you assuming you have considerable amount of equity in a property you already own. Let's just say for now that this doesn't really apply to our situation.
With all that being said, a lender could offer one or more of these loans. Take some time to watch the ads in the real estate section of the Sunday paper. See whose offering what at what interest rate. Don't be shy in calling them to inquire about the loan. Find out what the terms are and how you can qualify for the loan. The terms you're interested in are:
- What's the interest rate?
- Are there points or fees attached to the loan?
- What kind of FICO score would you need to obtain the loan?
- Is there a prepayment penalty for the loan?
By the way, I forgot to mention that we don't want to have a prepayment penalty on the loan as much as possible. A prepayment penalty means that you will have to pay in order to get out of the loan - kind of like having to pay to get out of your cell phone contract early.
By the way #2, also remember that you're only shopping for your loan at this point. Unless you're ready to buy, don't let them pull your credit just yet.
Be the informed buyer. I know this information may all make your head spin, but it'll be worth it when you get the keys to your new home! This is your year to turn your dreams into realty!
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Check Out Your Credit BEFORE You Apply for the Loan
OK, it's like this... Would you rather walk around in a dark room or turn on the light so you can at least see where you're going? Unless you regularly check your credit report, you probably have no idea what your credit is actually like. Even if you check it annually, one year is still a long time and on top of that, most people only run their report when they are applying for a loan. Do you ever see that report?
My point is that you should know where you're headed. Every time some one pulls your credit report, that counts as a credit inquiry. If you have too many credit inquiries, that lowers your FICO score which is so important in qualifying for a loan (unless you plan on paying for your property in cash). That credit report also has a shelf life and could be pulled twice as part of the loan portion of the escrow process - once at the beginning to pre-qualify you for the loan and once at the end to ensure everything is still current.
Get a free credit report at none other than http://www.freecreditreport.com/. There are other websites that offer free credit reports as well. You will need to obtain a report that has your FICO score listed. Credit bureaus (Experian, Equifax, Trans Union) also offer one free report annually for consumers, but the last time I checked, the FICO score was not included. Things may have changed.
Review the report for any errors and correct them if needed. In some situations, this may take months! Give yourself the time you need to prepare for your loan without impacting your credit score. Talk to lenders and find out what kinds of FICO scores are necessary for the loans they are advertising. Know where you stand before you apply for the loan. You'll feel much more confident about the loan process if you know where you're headed!
Happy loan hunting!
***Your realtor may also be able to help you estimate a ball park figure of the amount of loan you may be able to qualify for.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
My point is that you should know where you're headed. Every time some one pulls your credit report, that counts as a credit inquiry. If you have too many credit inquiries, that lowers your FICO score which is so important in qualifying for a loan (unless you plan on paying for your property in cash). That credit report also has a shelf life and could be pulled twice as part of the loan portion of the escrow process - once at the beginning to pre-qualify you for the loan and once at the end to ensure everything is still current.
Get a free credit report at none other than http://www.freecreditreport.com/. There are other websites that offer free credit reports as well. You will need to obtain a report that has your FICO score listed. Credit bureaus (Experian, Equifax, Trans Union) also offer one free report annually for consumers, but the last time I checked, the FICO score was not included. Things may have changed.
Review the report for any errors and correct them if needed. In some situations, this may take months! Give yourself the time you need to prepare for your loan without impacting your credit score. Talk to lenders and find out what kinds of FICO scores are necessary for the loans they are advertising. Know where you stand before you apply for the loan. You'll feel much more confident about the loan process if you know where you're headed!
Happy loan hunting!
***Your realtor may also be able to help you estimate a ball park figure of the amount of loan you may be able to qualify for.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Funding Your Downpayment
If not having a downpayment is keeping you from buying your first property, here's some information that'll help you! You will need to be a 1st time home owner (not owning any residential property on Oahu within the last three years). You will also need to comply with income requirements and other specifications.
The American Dream Downpayment Initiative (ADDI) will fund a maximum of $5000 towards a down payment as a grant. That's really helpful since it's in the form of a grant - meaning that you do not have to pay it back.
The second type of assistance comes in the form of a loan from the City and County of Honolulu with a maximum loan amount of $25,000. The great thing about this (besides the high loan amount) is that it comes with a 0% interest rate. You are also able to apply for the ADDI grant, but the maximum amount granted will be reduced to $3000. That's still a great opportunity!
For more information regarding these programs, click on the link below:
http://www.hicentral.com/public_REALTOR_window_9.html
Talk to your lender to help you pursue this opportunity.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
The American Dream Downpayment Initiative (ADDI) will fund a maximum of $5000 towards a down payment as a grant. That's really helpful since it's in the form of a grant - meaning that you do not have to pay it back.
The second type of assistance comes in the form of a loan from the City and County of Honolulu with a maximum loan amount of $25,000. The great thing about this (besides the high loan amount) is that it comes with a 0% interest rate. You are also able to apply for the ADDI grant, but the maximum amount granted will be reduced to $3000. That's still a great opportunity!
For more information regarding these programs, click on the link below:
http://www.hicentral.com/public_REALTOR_window_9.html
Talk to your lender to help you pursue this opportunity.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
Plantation Town Apartments
This development is being built by Hawaiian Island Homes, Ltd. It is conveniently located, close to schools, Waikele Shopping Mall, and the freeway entrance.
There is a lender onsite to assist you with funding if necessary.
For more information, click on the title of this post to get to the website.
If you would like to view a model of these units, let me know and I will be happy to arrange that for you.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
There is a lender onsite to assist you with funding if necessary.
For more information, click on the title of this post to get to the website.
If you would like to view a model of these units, let me know and I will be happy to arrange that for you.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
ckn0316@hawaiiantel.net
Office: (808) 488-2992
May 2007 Oahu Resale Market Info
Median Sales Price Single Family Residence: $650,000
Median Sales Price Condos: $325,00
Median Number of Days on Market - Single Family Residence: 42
Median Number of Days on Market - Condos: 38
Contact me if you need other data.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
Office: (808) 488-2992
Median Sales Price Condos: $325,00
Median Number of Days on Market - Single Family Residence: 42
Median Number of Days on Market - Condos: 38
Contact me if you need other data.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
Office: (808) 488-2992
Is This the Right Time to Buy? - For 1st Time Homeowners
We're hearing in the news - "The sky is falling!" "Real estate is going to drop!" We're reading that interest rates are on the rise.
Is this the right time to buy? That answer depends on what you want to do with your real estate purchase. Our parents probably bought one house in their life time - it's the one you grew up in and the one they still live in. If that's your plan, 30 years down the road, it's probably safe to say that your property value will have gone up. There isn't any new land being created - at least on most of the major Hawaiian Islands and unless you want to live on a lava field.
Still 30 years is a long time and a lot can happen. We've been reading in the newspapers about the increase in foreclosures happening nationwide. We think what if that were me?
Is this the right time to buy? If you're a first time homeowner, the next question is your REAL question - Am I prepared to buy my first home? If not, how can I get prepared? Here are some things to think about.
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
Office: (808) 488-2992
Is this the right time to buy? That answer depends on what you want to do with your real estate purchase. Our parents probably bought one house in their life time - it's the one you grew up in and the one they still live in. If that's your plan, 30 years down the road, it's probably safe to say that your property value will have gone up. There isn't any new land being created - at least on most of the major Hawaiian Islands and unless you want to live on a lava field.
Still 30 years is a long time and a lot can happen. We've been reading in the newspapers about the increase in foreclosures happening nationwide. We think what if that were me?
Is this the right time to buy? If you're a first time homeowner, the next question is your REAL question - Am I prepared to buy my first home? If not, how can I get prepared? Here are some things to think about.
- Do you know what your credit score is like?
- How much mortgage can you afford?
- Do you know where you'd like to live?
- Do my spouse and I agree that this is the right time for us?
Just remember that nothing is impossible. Your dreams of home ownership can become a reality but you have to be financially prepared to handle that blessing!
I'd like to help you turn your dreams into realty! This is your year!
Coreen K. Nishijo (RA)
The Master's Plan Realty, LLC
Office: (808) 488-2992
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