Stay away from “alternative” loans – like interest only mortgages. If the value of the house goes down after you buy it (not unreasonable in today’s Hawaii real estate market) you’ll end up owing to the bank more than the house is worth.
Shopping for a mortgage will also help if you can get “pre-approved” for the amount you’d like to borrow. This means the lender has looked over your credit and financial statement and agreed to lend you the money. Sellers like pre-approved buyers because there’s less risk to lose the deal.
Step 2: Find a good lawyer. Ask around. Check them out on the Web. Make sure you at least talk to them on the phone and ask them how much they charge: this should be a fixed fee. Ask as many questions as you can, but you probably won’t get more than 5-10 minutes. Lawyers bill by the hour, so they don’t like to give time for free. You’re looking for someone who is honest, direct and takes the time to explain things.
Step 3: Find out by your realtor what houses are selling for in your area – and how much you’ll have to pay for what you’re looking. Look at selling prices – not asking prices. You can get these from a real estate agent or from your local paper or town/county government. When you find a house roughly like the one you want, as for three “comparables” – recent sales of houses that are roughly your target house.
Step 4: Come up with a down payment – usually 15-20 percent of that price. (This is the hard part.) You may not have to put that much down (see step 1) – some lenders will go for 10 percent to 3 percent. But these loans are riskier and usually more expensive. Besides, without a down payment, you don’t own even a piece of the house. The bank owns the whole thing.
Step 5: Find an agent. You don’t have to have an agent, but the real estate industry has pretty much locked up the supply of houses in the hands of agents. Ask around. Check on the Web (www.findhawaiihouse.com) for your state's real estate licensing board (HBR on Oahu) to make sure they're registered and don't have any complaints or suspensions.You’re trying to find someone you can trust, so the first time you catch those stretching the truth find another one. Real estate agents speak their own language: what you or I would call a broken down shack becomes a “fixer-upper with charm.” At all times, remember that the agent works for the seller – not you. (There is one exception: something called a “buyer broker” who is paid only by you. These folks are still relatively rare.)
Sergey Yarovikov (RA)
CENTURY 21 All Professional
Honolulu Hawaii
