Alternative down payment options - two first-timers break the code

 

FIRST-TIME HOMEBUYERS

Part 2 of 3

Three-part series focusing on the challenges that face first-time homebuyers.

NEXT SUNDAY: Condos allow first timers to start small.

 

HONOLULU ADVERTISER , January 22 2006

BY LISA SCONTRAS

Custom Publishing Group

 

Kicking yourself for not buying that 3-bedroom house five years ago? That one that has appreciated 100 percent? And now you are running short on down payment cash because you just had to have that fancy new car which has done nothing but depreciate since you drove it off the lot. Besides that, the rent is due again ...

 

Many local residents, including renters and singles, were able to buy their first home last year joining the 69 percent of Americans who did the same — a historic high. Yet others feel like they have missed the boat. After all, how can you buy a home when you have no cash? What resources are available? Can your real estate agent and loan officer really work miracles?

 

Buyers Robert and Judy Iokepa say theirs did.

 

“Our confidence level was low but we were persistent and ultimately it paid off,” says Robert Iokepa, whose Realtor, Toan Doran, was able to coordinate with the seller to advance the Iokepa’s most of the down payment needed to close.

 

Iokepa says, “It was several things that all came together — the right seller, the right Realtor and the right banker — to help us come up with needed funds.”

 

Home prices have gone up so high and so quickly they’re simply out of reach for most “normal” people.

 

But don't tell that to Victoria and Alex Agustin. They bought their first six homes last year — all of them single family homes — they're living in one, renting four and renovating the sixth. Victoria Agustin says the tenants pay the mortgages and there is still some pocket change left over.

 

“We took a risk to see if we qualified,” remembers Victoria Agustin, who says all six homes are in Waianae. “We were pretty shocked ourselves.I am a cashier’s assistant at Costco and my husband is a foreman at a roofing company ... we’re just regular people.” Agustin says she and her husband just decided that it was time to start planning for their retirement — even in their early 30s — and are making a case for raw determination. They successfully bought their first four homes using 100 percent financing.

 

“It’s all about what you want in life,” says Agustin, who has never owned a credit card. “We saw how hard it is to make money and how easy it is to spend it. And we just decided that we might as well spend it on something that will bring money back in.”

 

Doran, the Prudential Locations, Inc. agent who helped both these young families buy homes last year, says one of the key reasons holding people back is a fear of the unknown.

 

“It’s human nature to shy away from unfamiliar territory,” says Doran. “Many first-time buyers tell me that they are so intimidated by the home-buying process because there is so much involved and they don’t know where to begin. So they end up not taking any action.”

 

Agustin says she doesn’t think they could have done it without their Realtor and loan officer.

 

“They gave us direction,” she says. “They really wanted us to succeed. A lot of people told us we couldn’t do it. That just motivated us more.

 

 

Mortgage Options

Using this table, it’s easy to compare monthly payments vs. cash needed on a purchase price of approximately $250,000.

 

	Mortgage realities on a $250,000 condo:
		30-Yr Conventional	30-Yr Conventional	$0 Down/100% Financing
	Down Payment	20% Down	10% Down	0% Down
	Amount Borrowed	$200,000	$225,000	$257,500
	Interest Rate	5.750%	6.000%	6.250%
	Cash Needed To Close	$55,500	$30,625	$500
	Monthly Payment	$1,420	$1,700	$1,840
	Interest Paid After 30 Yrs	$220,200	$278,800	$313,300
	Gross Monthly Income Required:
	With $0 Debt	$3,000	$3,600	$3,900
	With $1,000/Month Debt	$5,100	$5,700	$6,000

 

back to Helpful Articles for Buyers

 

view Part 1 of this Article

 

view Part 3 of this Article