Buying Your First Home - It's Easier Than You Think!

Many people think they can’t buy a home, for a variety of reasons. Maybe they have poor credit, perhaps very little money saved or maybe the whole process of buying and owning a home is just so overwhelming it’s simply easier to rent.

Well, the unknowns of buying a home shouldn't be a deterrent. Start by asking a simple question. Is buying a home right for me? Oftentimes there is a need, motivation or driving force leading towards the thought of buying?

• Are you tired of paying rent?
• Do you want more privacy?
• Are you looking to move out of your parent’s home?
• Has your family grown and you need more space?

I thoroughly enjoy working with first time homebuyers, and the first and most important item on the agenda is to meet face to face, because I want my clients to understand the process without feeling too lost or overwhelmed.

One of the first questions a lot from first time homebuyers ask is this: are there other options for first time homebuyers that don’t include a big down payment? And my answer to them is YES, YES, and YES!

Long gone are the days of a monstrous 20 percent down payment. Our grandparents’ generation hands-down did a fabulous job with saving their 20 percent for a home, and most often with only one income. Just know that even though you don't have $60,000 lying around, there are still options for you to own a home.

Many of my first time homebuyers found comfort in a loan called USDA Rural Housing Development loan, which allows a buyer to purchase a home with NO down payment. Here’s another way to save a few dollars: find out if your lender participates with the Mortgage Credit Certificate Program, which saves you some tax dollars at the end of the year. Some buyers have cash and purchase single-family homes or condos with as little as five to 10 percent down with a conventional loan. 

There are other options for a down payment such as gifted funds from family or friends or borrowing from your retirement accounts, however I normally don't recommend using co-signers, as it can get sticky down the road when each borrowers' life situation changes. If someone can buy on their own, I encourage them to do so—even if it's a one or two bedroom condo.  This unit will be a stepping stone to them allowing them to upgrade to a larger home or acquiring investment properties in years to come.   

Here’s the bottom line: lf you’re considering buying a home, don't let the thought just float around in your head and let negativity creep in. Find a trusted REALTOR® and loan officer, submit your financial documents and find out what options are available to you. You’ll never know how to get where you want to be, unless you know where you are now.

Sometimes all it takes is formulating a plan. I have clients who started the preapproval process a year and a half ago and they just closed on their home in Mililani -- once they knew their goal (save $20,000 and pay off debt) they focused together and made it happen!

With all my first time homebuyers, I encourage a practice offer session before we start looking for homes. I sit down with them, go over the purchase contract and discuss items they should be aware of as well as costs to consider like:

• Additional deposits
• Home inspection fee
• Appraisal fee
• Insurance costs, and
• If they have funds or are willing to pay for an appraisal shortage.

It’s very important to me that my clients know the fees for which they are responsible. Oftentimes first time homebuyers don't understand the closing costs portion and are surprised towards the end of the transaction. There should be no surprises.  

Overall, the entire home buying process takes between 45-60 days from preapproval to close when you get the keys to your very own property!! If you have any further questions on the purchasing your first home, please feel free to give me call.

Kendra Okihiro (RA)