Before Buying a Home in Hawaii

If you are trying to figure out what to do before buying a home in Hawaii, I’m going to give you my best advice I offer to my clients… Before you do call a realtor, I would get a pre qualified mortgage first. A lot of people, they call myself, and they want to set up showings, but that actually takes time away from a realtor when you are not in position to buy. A realtor has to make phone calls to set up that showing appointment, put gas in our car to show you all these “potential” homes.

You may or may not even be qualified to purchase a home or purchase a home within that price range. I suggest to buyers to get prequalified first, so that you know “how much house can I afford” and when you do call your realtor, you can look at all the homes that you’re pre qualified for and not waste your time or theirs.

Showing homes is a second step in buying a home. The first step would be to meet with your lender, see what you’re qualified for. Then your realtor can go ahead and take you all around to find the perfect property and home to purchase.

I’d like to also define the differences between mortgage Pre Approval vs Pre Qualification so you can have the most success in your Big Island Real Estate home hunt.

Pre Approved Definition:

In lending, pre-approval has two meanings: … Although, to a typical consumer, “you’re pre-approved” means “you already passed the approval process and therefore are guaranteed to be immediately granted the loan if you apply,” the literal meaning is different. The literal meaning is “at a stage before approval.”

“ Pre Approval vs Pre Qualification:

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a pre-approval is much more valuable because this means the lender has actually checked your credit and verified your documentation to approve a specific loan amount (usually for a particular time period such as 90 days). Final loan approval occurs when you have an appraisal done and the loan is applied to a particular property.

5 Things You Need To Be Approved for a Mortgage

1) Proof Of Income

“No verification” or “no documentation” loans are a thing of the past, so all borrowers need to be prepared with W-2 statements from the past two years, recent pay stubs that show income as well as year-to-date income, proof of any additional income such as alimony or bonuses and your two most recent years of tax returns.

2) Proof of Assets

You will need to present bank statements and investment account statements to prove that you have funds for the down payment and closing costs, as well as cash reserves. An FHA loan requires a down payment of as low as 3.5{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} of the cost of the home, while conventional home loans require 10{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} to 20{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7}, depending on the loan program. If you receive money from a friend or relative to assist with the down payment, you will need a gift letter to prove that the funds are not a loan.

3) Good Credit

Most lenders today reserve the lowest interest rates for customers with a credit score of 740 or above. Below that, borrowers may have to pay a little more in interest or pay additional discount points to lower the rate. FHA loan guidelines have tightened in recent months, too, so that borrowers with a credit score below 580 are required to make a larger down payment. Most lenders require a credit score of 620 or above in order to approve an FHA loan. Lenders will often work with borrowers with a low or moderately low credit score and suggest ways they can improve their score.

4) Employment Verification

Your lender will not only want to see your pay stubs, but is also likely to call your employer to verify that you are still employed and to check on your salary. If you have recently changed jobs, a lender may want to contact your previous employer. Lenders today want to make sure they are loaning only to borrowers with stable employment. Self-employed borrowers will need to provide significant additional paperwork concerning their business and income.

5) Documentation

Your lender will need to copy your driver’s license and will need your Social Security number and your signature allowing the lender to pull a credit report. Be prepared at the pre-approval session and later to provide (as quickly as possible) any additional paperwork requested by the lender. The more cooperative you are, the smoother the mortgage process will be. “

[ Source: 5 Things You Need To Be Pre-Approved For A Mortgage  ]

Find the current FHA rates and the fha pre approval calculator here:
https://www.fha.com/calculator_afford

Mahalo!
Lailan Bento

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