After the 1st Time Buyer Tax Credit, after the bottom of the price freefall, and saddled with a large inventory of short sales and foreclosures, even in Hawaii, how can a buyer in Hawaii Kai decide he or she is in the best position to purchase a home?
Based on some ideas in Ilyce Glink's new book, "Buy, Close, Move In!" (Harper, $14.99), here are some changes in the industry which have produced a paradigm shift in real estate across the country.
1. Buyers need money. The larger the down payment, the better the rate, the lower the fees (this has always been true). But the days of easy money are gone. Except for a few federal programs, like VA loans, the availability of zero down and low down loans is scarce. Many banks now want 25% down, so buyers will have a sizable equity position in the real estate.
2. Credit is tight. One of the new acronyms is NINJA, or "no income, no job, no approval." Buyers also need a credit score in the high 700s to get a "good" loan. You will have to prove your employment, income, assets, child support, and reveal debts and expenses. Now buyers have to prove they can make the mortgage payment, instead of lenders proving they can make you a loan.
3. Home ownership isn't a right. Homeownership is a responsibility - to yourself, your family, the lender. Glink says a major lesson learned by the housing recession is that not everyone can or should own a home.
4. Smaller is better. Square footage of the average new home declined in 2009 for the first time in almost 30 years, as did the average number of bedrooms and baths. Tightening belts has also brought a hard look at energy efficiencies, both in housing and in lifestyle. For now, the trend is to smaller and greener.
5. Transparency. Just as the White House is trying to do with big government, the housing industry is trying to remake itself. Thanks to both regulatory reform generated by the housing crash and the Internet access to information, buyers are receiving loan figures and costs up front. Here are some new guidelines (NewsGeni.us.com):
*Since Jan. 1, 2010, home loan originators must give you the new, mandated Good Faith Estimate (GFE) within three days of accepting your application. At closing, the lender must provide borrowers with the new Settlement Statement HUD-1, the final line-by-line list of mortgage and closing costs.
*Along with the GFE, you'll also receive the new Shopping For Your Home Loan: HUD's Settlement Cost Booklet which helps explain the two documents which do more today than ever in terms of disclosing costs and helping you shop around and compare loans."
*Buyers and their Realtors can and do use the internet to check home prices, compare values, and research areas.
6. There are no guarantees, expecially that the market will go up. The last couple of years have brought into clear perspective that appreciation does not last forever. Yes, you can and will make money in real estate, but not necessarily quickly and not in every area every time.
Hawaii Kai buyers should decide if and when they can afford a home, use a professional Realtor who knows the area (me), is knowledgeable on neighborhood trends and values, and then purchase because owning is a better investment for them than renting, at that time in their lives.
Call or email for details on any condo complex or community in Hawaii Kai. Let's talk and see if now is a good time for you to consider buying a home in Hawaii Kai.
Barbara Abe, Realtor