According to a recent article in the Honolulu Advertiser, Hawai‘i needs about 66,000 homes built over the next decade to satisfy demand. And most experts agree that not enough homes are being built to satisfy this demand.
So why buy a home? For one thing, your rental payments to the landlord become mortgage payments that can actually give you something tangible in return.
By owning a home, you are truly independent. And come tax time, the federal government allows homeowners to write off interest paid per year, which in many cases drops the net monthly payment to what you would have paid in rent.
Assuming you want to go buy that first home, here are some things to consider.
First, what type of home best suits your needs?
Do you need a traditional single-family home or will a condo do?
Second, how much mortgage do you qualify for and can you handle the monthly payments?
Very few people have enough cash to plunk down on a house; the rest of us will need to borrow that money through a mortgage.
Finally, who will help you find that home and guide you through the purchase? I can safely say that you will need a real estate agent.
Here is the basic process of buying that home.
Find a home. You should get a feel for what you want in a home by driving around different neighborhoods. It would be a good idea to establish a relationship with a real estate agent.
Consider financing options. The standard down payment is 20 percent of the purchase price. That can be difficult, so start saving for that down payment. Research first-time homebuyer incentives offered by the state and federal governments; check with your agent or lender.
Make an offer. Depending on the market, you may be able to offer less than the asking price. Consult closely with a real estate agent to see how you should proceed in making that first offer. The seller will either accept your offer or make a counteroffer or reject your offer. If you and the seller reach an agreement, then the process transitions into escrow.
Escrow is a short period of time when the seller takes the house off the market on the contractual expectation that the buyer will buy the house. The escrow company will make sure that the seller has marketable title and that the property is free and clear of all liens and encumbrances, ensuring a clean title to the home.
Obtain a home inspection. It is very important to have a trained professional inspect the property for quality, safety and overall condition. If there are serious defects that the seller did not disclose, you generally can rescind your offer and get your deposit back. The lender will require an appraisal to be done on your behalf as well.
Close and move in. If all is good, then you should be able to close the transaction. Closing does involve signing a lot of paperwork so make sure you understand what you are signing.
These are the basic steps to purchasing a home, and they are the same whether you purchase a home in Hawai‘i or somewhere else in the United States.
I wish you all well in this process; it is daunting but very worthwhile.