Ka Wai Ola - Office of Hawaiian Affairs, Volume 20, Number 05, 1 May 2003 — Dump debts to boost home-buying power [ARTICLE+ILLUSTRATION]

Dump debts to boost home-buying power

Kūkākūkā

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By Blossom Feiteira Blossom Feiteira is a member of the OHA Advisory Committee for Housing. So, you want to buy a house but you don't know how. The who's and what's and where's ean be intimidating, confusing and discouraging. For most people in Hawai'i, buying a home is an impossible dreara, or so you may think. For instance, have you ever said to yourself: "I don't make enough money" or "I have too mueh debt" or "my credit is so bad, I will never be able to get a loan," or how about "I don't have the money for a down payment?" Take heart: there is a way for even you to become a homeowner. Tackle 'obstacles' one by one Let's take a step back and look at all of these "obstacles" to homeownership. For instance, "Not enough money." For first time homebuyers, there are loan products available now that you ean qualify for regardless of how mueh money you make. The federal government has several programs whieh, depending on your

ineome, ean get you into a home with little or no money down. Various organizations and government agencies have down payment assistance programs that ean help you get the funds you need for your down payment and closing costs. Got bad credit? There are steps you ean take to elean up your credit to the point where you ean qualify for a loan. Various organizations in your community ean help you develop a strategy that will get you back on track to repair your credit. Too mueh debt? Well, there are steps you ean take to reduce your

debt and qualify for a loan. With the help of a credit counseling or housing organization, you ean develop a strategy that will help you reduce your debts and help you meet the criteria for a successful loan application. A reality eheek: one of the steps that a lender will use to determine your ability to qualify for a mortgage loan is what they eall the "debt to ineome ratio," also known as the "back end ratio." The lender will take all of your monthly payments for debt, add in your monthly housing payment, and compare the total

to your gross monthly ineome. In most government guarantee programs, the ratios for your housing payment should not exceed 29%. In other words, for every $1,000 of gross monthly ineome you earn, your monthly housing payment should be no more than $290. Typically, for a first time homebuyer program, your debt ratio (including your housing payment) should not exceed 41 percent. What this means is that, for every $1,000 of gross monthly ineome, your monthly housing and debt payment

should equal no more than $410. Now, if your debts add up to more than that, this does not mean you will be disqualified for a loan. It does mean that your ability to get a loan with better terms and interest rates will be compromised. Decreasing the amount of monthly debt that you carry will go a long way to helping you get great terms and an interest rate you ean be happy with. īmua - do whatever it takes Taking those first steps to owning your own home is not as complicated a matter as you may think. There is only one question you need to ask yourself, and that is: "What am I willing to do to become a homeowner?" If your answer is "Whatever it takes," then you need just make one phone eall to get all the help you need. OHA and several homebuyer training workshops in your eommunity ean answer your questions and provide you with the tools you will need to qualify for a loan. (See OHA homeownership workshops below.) If you are serious about becoming a homeowner, then givc one of them a caiiTirwon mun, ana li coul"d*be u V(U1. IV " v ** ~

the best thing you ean ever do for yourself and your family. Editor's note: Blossom Feiteira is education services director of the Maui-based non-profit Hawaiian Community Assets, whieh provides homeownership and financial literacy training, debt reduction and credit repair counseling. Feiteira is also president of Hui Kako'o 'o 'Āina Ho'opulapula, the statewide group comprised offamilies awaiting Hawaiian Home Lands awards. ■

The Ramos famlly spends some quality tlme at thelr new house In Kona: a slmple pleasure that on!y a few years ago they would not have belleved posslble. Today. wlth the help of an OHA-funded self-fiēip~nousing prq)ect7-tho Romoo «omUy hot moved from the ranks of renters to become homeowners. Phoio: eoioi McDonoid