Ka Wai Ola - Office of Hawaiian Affairs, Volume 21, Number 2, 1 Pepeluali 2004 — Smart debt planning for the new year [ARTICLE+ILLUSTRATION]

Smart debt planning for the new year

By Ka'imo Muhlestein

So the annual holiday spending is over. But is it really over? For many of us, paying off our holiday debts is now just beginning, so now might be a good time to decide what your 2004 annual budget will look like. If you are considering purchasing a home and need help to finance your purchase, mapping a 2004 budget is in your best interest. Identifying, organizing and paying your monthly payments on time will help you to feel good about yourself and establish a favorable credit report. Just where ean you start in this new year? A good plaee to begin

is to concentrate on paying down your debts on time. And if possible, try not to create any new

debts for this year. Try

instead to set aside money

for necessary purchases throughout the year. In order to purchase a home, many of us need to borrow a large amount of money from a bank. What

exactly does a bank look for in granting such loans? Lenders want to know how mueh debt you owe and how many times you were late making your payments; they want to know if you are able to pay back the money and whether you are a creditable borrower. Not being aware of what a lender expects ean lead to disappointment, so it is important to know what is expected from you when qualifying for a mortgage. Contact a loan officer or a home ownership eounselor at any lending institution to find out more about loan requirements.

If this will be the first home you purchase, it will be important to thoroughly research how mueh it will cost you to buy a house. Some of the main factors are your ineome, debt-to-income ratio and credit history. For those who may have an offer from your landlord to purchase the home, you should know exactly where you stand in qualifying for a mortgage. See a loan officer or home counselor about this. Remember, regardless of your current financial situation, you ean improve your credit record. Organizing your 2004 budget will assist you greatly in that process. Smart planning will help take you a long way, especially, on your pathway to homeownership. If you are uncertain of how to get started on that path, eheek with loeal organizations who provide homeownership and financial literacy assistance, such as the Hawai'i HomeOwnership Center at 523-9500, or online at hihomeownership.org. Ka'imo Muhlestein is OHA's home-ownership specialist. ■

A periodic eolumn of helpful advice presented by OHA's Health, Human Services, Housing and Education division.