Shopping with savvy

STAR-ADVERTISER: What sorts of questions should people ask themselves before they consider buying a home?

OSHIRO: What’s their purpose in buying? Homeownership isn’t for everyone, but studies have shown that over time, families of equal income who buy their own home accumulate over 12 times the net worth than their counterpart family who chooses to rent.

How much are they willing AND able to put down toward their purchase, then how much each month toward a mortgage payment and maintenance costs?

STAR-ADVERTISER: As a prospective first-time homebuyer, where does someone start the process? Does one have to wait until they have saved up for a down payment?

OSHIRO: We always recommend that prospective buyers begin their quest for homeownership with an HUD-approved education and counseling agency such as Hawai’i HomeOwnership Center. In this way, families can begin to address various areas needing attention simultaneously — aside from down payment funds, is a low credit score an issue? How much financing can they qualify for? How much income will they need to have?

The bottom line is: Why wait until you’re out shopping for a home? Get the facts early, get qualified, before you begin to shop. You’ll save yourself a lot of unnecessary visits to homes which you may not want to pay a high mortgage payment for.

STAR-ADVERTISER: As someone who has never bought a home before, how can someone know the right kinds of questions to ask before, during and after the process? Where does one look for this sort of guidance?

OSHIRO: Four areas of concern for first-time buyers are:

>> Budgeting. We’ve found that no two families of equal income end up with the same amount of money at month-end. Neither’s right or wrong, it’s just a function of planning and goal-setting.

>> Credit. What is a credit score, and how does it impact the ability to get a mortgage loan at the best rate?

>> Shopping for a loan. Which is better, fixed-rate or adjustable-rate mortgages? How can you tell which one costs more? Does my credit score affect the cost of my loan?

>> Shopping for a home: How to view homes and inspect neighborhoods, consider commuting time and cost.

STAR-ADVERTISER: Can a person still qualify for a mortgage if he or she previously filed for bankruptcy or had an otherwise troubled financial past?

OSHIRO: Good question, as there are many families who through no fault of their own suffered life events such as job loss or medical emergencies which severely impacted their ability to keep up with their credit obligations. Regarding mortgage payments, there are several forms of remedies being used which, once settled, result in mandatory waiting periods before being able to apply again for traditional mortgage financing.

Typically, the bankruptcy waiting period is four years, a short sale or deed-in-lieu is two to four years depending upon your down payment percentage, and foreclosure is typically four years. That said, there may be extenuating circumstances and lender requirements which frequently change. Basically, this is another good reason to get prepurchase advisement for current qualification before you go shopping.

STAR-ADVERTISER: Should a single parent, widow or widower even bother trying to buy a home or are they destined to be a renter the rest of their lives?

OSHIRO: One of our best stories involved this situation: single mom with her son, one income. The short story is that she was able to use a state agency’s special mortgage program coupled with our down payment second mortgage.

The result: three percent down payment and two mortgages, both for 30 years at 2.95 percent interest rates. I’m not saying that’s available every day, but this is what can happen.

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Interviewed by Erika Engle

PROFILE DENNIS OSHIRO >> Title: Executive director >> Organization: Hawai’i HomeOwnership Center, a U.S. Housing and Urban Development-approved education and counseling agency >> Address: 1259 Aala St., #201, Honolulu >> Phone: 523-8115 or 877-523-9503 >> Email: dennis@hihomeownership.org >> Online: www.hihomeownership.org >> Classes: For a one-time membership fee of $60 family members are welcome to attend homebuyer classes. Live sessions are scheduled at the agency’s offices on Aala Street on the grounds of Hawaii USA Federal Credit Union or online.