The American Dream
can be realized
for Hawaii residents

Interest rates are at a record low across America, so one would think more families would be clamoring to buy homes. Locally, this is not necessarily the case.

Hawaii has a firm lock on being nearly the last state in homeownership rates. As a city, Honolulu is way down on the list-- 72nd of the 75 largest U.S. cities, according to Greg Field, one of the instructors of the "Realizing the American Dream -- First Time Homebuyers" class.

According to United States census data, income is about the same per capita as the national median. But, in Hawaii the median value of a home is 225 percent of the median value nationwide.

"Hawaii's real estate prices are among the highest in the nation," said Claudine Allen, of the U.S. Department of Housing and Urban Development, which explains why many people cannot afford to purchase a home.

"According to the Honolulu Board of Realtors, the median price of a single family home is $365,000 and the median price of a condominium is $166,000," she said. The national median for a single family home is $163,000.

To help more people become homeowners, with the tax advantages and long-term appreciation benefits, Waimanalo Community Development Corporation developed a free homebuyer education class that is certified by the Department of Housing and Urban Development, with trainers certified by the Neighborhood Reinvestment training Institute.

The major impediments to home ownership are low income, high consumer debt, poor credit and lack of information. The homebuyer education class addresses these issues and others, said Field. The 16-hour homebuyers class goes through pre-qualification for a mortgage with some simple calculations that allow for more input variables than most of the on-line mortgage calculators. "People are amazed at the impact of debt, and at the significance of the low-interest rates we are experiencing now," said Field.

The program also covers the pros and cons of homeownership, as well as setting goals, budgeting and saving, credit, mortgage loans, how to pre-qualify, assistance programs, looking for and buying a home, and managing your assets.

"In the first class we show how to request your own credit report, and the (next) week how to read it and if necessary improve the credit score," he said.

A wide range of individuals attend the class, from persons on Section 8 and in Public Housing to professionals in the upper middle-income levels, he said. "We show folks how to budget, and come up with way over a hundred ways to cut expenses.

"Often families tell us they are saving $150 per month on their regular expenses. For many families, the first order of business is to use those savings to pay off current debt: credit cards, car loans and personal loans. The next step is saving for a down payment," said Greg.

Reducing monthly debt payments can have a big impact on borrowing power. Eliminating $250 in monthly debt payments can translate to about $40,000 more mortgage loan, he said.

The class also points out special programs that can help persons qualify for a home, including the Individual Development Accounts program where a special savings account is set up to help moderate-income families save for a down payment. For every $1 saved, $3 is matched (up to a total of $5,000) to be used for a down payment and closing costs. Many assistance programs recommend or require taking a homebuyer education class to participate.

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