Can You Afford to Buy a Home in Hawaii? Here's What You Need to Know

Buying a home in Hawaii can feel overwhelming—but it doesn't have to be.

In this episode of The Advisor Podcast, Randy Ihara sits down with Katrina Mizuuchi, Mortgage Lending Manager at University of Hawaii Federal Credit Union, to answer the questions every current and future homeowner should know.

Whether you're buying your first home, planning your next move, or simply trying to understand today's lending landscape, this episode breaks down common mortgage myths, credit misconceptions, and practical strategies to help you buy with confidence.

In this episode, you'll learn:
 • Common myths about buying a home in Hawaii
 • How your credit score really impacts your loan options
 • Down payment misconceptions
 • What lenders look for during the approval process
 • Tips to prepare before applying for a mortgage
 • How to make smarter financial decisions as a homebuyer

If you're thinking about buying a home in Hawaii, this episode is a great place to start.

🎧 Listen, subscribe, and share with someone who's planning to buy a home.

@iharateam  |  iharateam.com  |  ihara@iharateam.com

Transcript

SPEAKER_01 0:00

If you've ever said, I want to buy a home, but I don't even know where to start, this episode is literally for you. To answer all your questions, to walk through the first steps, the credit questions, your debt questions, your down payment questions, all of it. With a real lender who does it every single day here in Hawaii. Welcome to the Advisor Podcast. We are Real Estate Wealth Advisors here in Hawaii, and our mission is simple to create plans to build, protect, and pass on wealth through real estate. We believe in providing you the information and options you need to make a good decision. Joining us today is Katrina Mizuchi, a lender with University of Federal Credit Union. Thanks for joining us today.

SPEAKER_00 0:50

Thank you for having me.

SPEAKER_01 0:51

Yeah, happy to have you on, Katrina. So yeah, Katrina is a mortgage lender with UHFCU with more than 20 years of experience in Hawaii real estate and mortgage financing. She specializes in guiding individuals and families throughout the home financing process by developing personalized lending solutions tailored to their unique goals. In her leadership role, she is dedicated to supporting and empowering her mortgage team to deliver exceptional service and expertise to every client. So thanks for joining us today.

SPEAKER_00 1:23

Thank you. I'm excited to be here.

SPEAKER_01 1:25

Yeah, we're glad to have you on. You know, um, you know, we speak with a lot of lenders and a lot of different people, and you know, the heart that you guys have to helping the community, helping these families is very touching. So we're glad to, you know, have you on to share a little bit more about that.

SPEAKER_00 1:42

Thank you.

SPEAKER_01 1:43

Yeah, yeah. So, you know, for someone out there that, you know, wants to buy a home that you know isn't sure where to start, you know, what's the first three steps that you would recommend them to take?

SPEAKER_00 1:54

Um, well, the first three steps, the first one would be really just to look at your own personal finances, uh, take inventory of where you're at. Um, you know, when you come to a lender, we're gonna analyze your finances and we're gonna tell you, okay, this is what you qualify for, but you really know what you really can afford. You know how many Amazon orders you have in a week, you know how many times you go to the coffee shop, how many times you eat out, and you know, buying a home, uh, we can tell you on paper, but you need to know what you're truly comfortable and ready to spend. Maybe buying that home means you need to sacrifice a night out for dinner once a week, or maybe having those dinners is more important to you. So um, you know, just really sitting there and to analyze what what your financial situation looks like in reality.

SPEAKER_01 2:45

Yeah. Yeah, no, that's a good, very good distinction. And just determining what matters more, right? What's more important to you? So yeah, no, I think that's very important.

SPEAKER_00 2:55

And then um, you know, the next step would be to once you kind of have your numbers in your head, reach out to a lender, a good lender who's gonna be able to not just um pre-qualify you, there's calculators online that can do that for you. Um, today anybody can just log on, do a search for a mortgage pre-quall calculator and and find one. But, you know, especially first-time home buyers or even move up buyers, they really need somebody who's able to look at their finances and provide feedback as to the best solutions, the best approach to things. Um, really just to be there as a a guide and an educator and a support system, not just somebody who spits out numbers. Because, like I said, calculators can do that for you. You need somebody with the education and experience to kind of guide you on the way. And then finally, would be to partner with a great real estate agent who understands your needs, isn't going to just try to sell you on the biggest house because they make the most commission. They're really there to um find the home that fits your needs and fits your finances and then negotiate for you. So you want to make sure that you interview and find a great realtor who's gonna do that for you. And a you know, a good team, lender and realtor working together is really what I've seen have the best success over the years.

SPEAKER_01 4:16

Yeah, yeah. It really takes a team effort to you know helping our clients get to their goals, right? It takes a team. Yeah. Um, I heard you mention pre-qualifications or pre-qual. What's the difference between a pre-qualification and a pre-approval?

SPEAKER_00 4:29

So a pre-qualification is you come to me and say, hey, I want to buy a house. And I say, Great. How much money do you make? What kind of bills do you have? How's your credit? Good, fair, bad, excellent. And I can just run some numbers on, I've done it on a napkin. You can just run some numbers and say, here's what you're qualified for. Rough numbers, just based off of what you're telling me. Um, as somebody who's shopping for a home, okay, that gets you kind of a ballpark idea. Am I looking for something smaller, something larger? Where am I looking at in a direction? But beer pre-approval means that you've actually sat down, we've looked at some documents together. I've looked at your income documents, um, whether it be your pay stubs or tax returns, we pull a soft pull credit report. So it doesn't hurt your credit scores, it doesn't count as an inquiry. Um, we just kind of pull it just to kind of see what's on there. Sometimes there's things on there that you didn't know was on there, shouldn't be on there. And we need time to get that cleared up. So doing the pre-approval process, we look through things like that. We look at your bank statements and your assets and say, okay, here's where you're at, here's what we need. Um, sometimes people are ready to go just off of that. And sometimes people need a little bit of counseling to direct them to save some money, maybe use some of your money to pay off or consolidate debt, or we need to clear up something on your credit report. Um, all of that can be taken care of and worked out before you get into contract so that you're not stressing in the middle of the contract. So a pre-approval, um, we really just go into depth and really get you ready for underwriting. Um, for us at UH Credit Union, what we try to do is basically get you truly pre-approved so that by the time you find that property, it's just a matter of approving the property. You know, um, I think from a realtor's perspective, uh, correct me if I'm wrong, but you guys prefer a pre-approval over a pre-qualification.

SPEAKER_01 6:31

Yes.

SPEAKER_00 6:32

Because you know that for a pre-approval, we've pulled credit, we've looked at documents. You didn't just tell us, I'm good, trust me.

SPEAKER_01 6:40

Yeah, yeah. Yeah, yeah, no. Definitely whenever helping a seller, we want to see that pre-approval. Right? A pre-qualification almost doesn't really mean much to the sellers, you know? Because they haven't validated or verified any of that information. Yeah. And then, real quick, just to touch on that, you mentioned soft poll of credit. Because I think a lot of people, you know, are scared to get that pre-approval because they think their credit score is gonna go down. Can you maybe shed a little bit of light on that? And, you know, what is that soft poll versus a hard pull, or how does that work?

SPEAKER_00 7:09

So a soft pull is basically as if you went and just looked at your credit yourself. There's no um ding to your credit score. So when the credit bureaus are evaluating somebody's credit score, they're looking at risk. That's overall what the numbers mean. The higher the numbers, the better, the lower risk you are. The lower the numbers on your credit score, the higher risk you are. So somebody who's going around and getting their credit pulled all over, the credit bureaus will think, oh my goodness, they're about to take out a whole lot of debt. They might be overextending themselves. And because bureaus don't exactly know what's going on, they can start to hit your credit score. Um, and so there is a little catch to that. So, because people understand that when you're shopping for a car loan, shopping for a home, you're going to evaluate different lenders. Most people buying a car will go to several dealerships and each one will pull your credit. So if you get your credit pulled as a hard pull within 30 days for the same type of loan, so all for a car loan or all for a mortgage, it'll hit you as if it's just one inquiry. And that can still hurt you. Um, it can drop anywhere from 10 to 20 points in one inquiry. However, a soft pull, it doesn't, it's as if it doesn't exist. We get to pull your credit and kind of take a peek behind the curtain before actually dinging your credit score. Um, a lot of lenders do it, but a lot don't, simply because it's an extra cost. So at UH Credit Union, we don't pass that extra cost on to you. We just we want to really truly help you to see where you're at because your credit is a huge factor in approval. So we want to make sure that we've got all of the information laid out in front of us.

SPEAKER_01 8:57

Yeah, no, that's really good. Thank you for explaining that. Um, I think a lot of people out there probably didn't know that, and including myself, you know, I didn't really fully know the extent of all that. So thank you for sharing that. You mentioned you you are obviously in a leadership position at University of Hawaii Federal Credit Union. You know, what's the difference between a credit union versus a bank and how does that affect the buyer, someone who's looking to get a loan? How does that affect them?

SPEAKER_00 9:20

So, in general, the biggest difference between a credit union and a bank is ownership. So a bank is owned by shareholders, stockholders. Um, most of the time, those are investors, and all they care about is the bottom line. Do we just gotta make money, right? There's um you hear of it all the time, banks they're um laying off, they're merging, they're doing all these different things because all they care about is the bottom line. Well, the credit union is member owned. So, what that means is that when you become a member of the credit union, you have an ownership stake. So every member, every person who has an account with us is a part owner of the credit union. So think about it this way: if you have 10 people that own a home and they all live there, you all bank with us, you want to make sure that your home is well taken care of. You don't want to just be spending frivolously or you know, tearing up the house, right? So, in the same concept, as a member at the credit union, you're gonna have input. We want to, as all of us as employees, we are members as well. We want to make sure that it runs well and we do everything to give back to you. So when the credit union is profitable, we give the profits back to you as a member. It comes back to you either by way of lower loan interest rates or higher dividend rates that we pay out. So it all comes back to you. It doesn't make our CEO richer because we had a great year. Um, also, we have as the credit unions locally in Hawaii, we are the lowest in fees, which means the fees that people pay. People pay fees to um for overdraft, people pay fees. Some people have fees just for um having an account. There's a minimum monthly fee. We don't have those fees, right? Um, we have certain ATM fees that we allow partners with that we waive those fees. Um, so there's a lot of fees that we waive. We are the lowest in fees when it comes to charging. So we do that to help our members. So that's the biggest, the biggest difference between a bank and a credit union.

SPEAKER_01 11:27

Yeah, I mean, it sounds like you're helping members on the front end or the back end, but either way, it's still helping the members. Yeah. Right. So that's so awesome to hear about that. So, you know, um when someone is interested in getting a loan or interested in speaking with a lender, you know, what does that conversation with you look like and how do they prepare for that conversation?

SPEAKER_00 11:48

So um every loan officer is different, but um I like to just kind of sit down and talk story with them. You know, find out your situation. What uh I mean, obviously you're coming to me because you want to buy a house, but what does that look like? You know, do you have a family? Are you looking for something big, something small? What are your goals today versus tomorrow? Because that all will come into deciding how we strategize your financing. Is this a home that you're looking into live in for the rest of your life? Or do you have it set in your goals that you're gonna be buying this with the intention to step up and you know buy something bigger in five years? Well, then that changes the strategy of how we're gonna look at things as far as down payment, interest rate, programs. Um, so when somebody comes to sit down with me, I usually just find out about them. What are your goals? What are you looking for? Um I ask them if they have questions. Because a lot of times they come in with their whole list of questions first, and I like to just kind of get that out of the way. Um, and then the conversation just kind of goes from there. Um, once we've established, you know, kind of have a baseline of what they're looking at, then I start getting into the qualifications part and asking them about their employment history. Um, and again, just real casual employment history, you know, um, how long have they been there? What kind of income do they make? Um, do they have, you know, stability? And if I find things in there that are red flags, I'll talk to them about it. Because it's not just about is it a red flag for underwriting and for an approval? We want to make sure that we set them up financially for the long run. I don't want to put them in a mortgage if their job is very unstable. We need to make sure that we plan for that, not just to get your loan approved, but to make sure that financially down the road, you don't come back to me in two years and say, oh my gosh, I can't pay my mortgage. You know, I don't, I don't ever want that. So I want to make sure that the clients are well prepared financially for this commitment that they're about to make. Um, and then we'll proceed into an official loan application and go with the process from there.

SPEAKER_01 14:01

Sounds like a pretty easy process. Yeah. Yeah, yeah. And I'm sure when you meet with clients, you know, they ask you things and you're like, oh, that's you know, where did you hear that? Because that may not be true. So, what are the some of the biggest misconceptions that buyers believe about lending, about finance that just isn't true?

SPEAKER_00 14:19

I think the two biggest misconceptions would be the 20% down payment and you need perfect credit. Um living in the market that we live in in Hawaii, it's almost impossible to have a 20% down payment on your own. I mean, on a million-dollar home, that's $200,000. Most people don't have just $200,000 saved in the bank. And as hard as you may try, you know, it's it's not easy to save that. Um, so having 20% down isn't a necessity. You can get loans. Um, there are some loans out there as little as 0% down. We offer loans as little as 3% down. Um, you know, there's there's also a lot of different avenues to get down payment assistance or programs that help with that. Um, and there's different ways that we can we can assist with you know making that qualification a little easier. Um, the other misconception is a perfect credit score. So while it's true, the better the credit score, the easier it is to get approved. Um, we understand that there's there's that's not always the case. And there's a lot of factors that someone would have less than perfect credit. Um something as simple as they just their balances are a little bit high on their credit cards. That's a quick fix, you know. Um but even at that, we don't need perfect credit score. What we're looking for more in a credit is, you know, your history. And sometimes if you're not quite ready today when we sit down, we'll come up with a plan and say, okay, so here's what we got to do. If you're willing to work with me on this, we can get you ready for a you know a loan in six months, maybe a year, maybe less. It just really depends on what the plan is. But it's definitely something that we can work through.

SPEAKER_01 16:07

Wow. So you guys will actually help them improve their credit so that they maybe can afford something in six months, a year, or even more, maybe.

SPEAKER_00 16:15

Yes, I have somebody that comes back to me every couple of months and says, okay, are we are we there yet? Are we there yet? Um, and I just I love her determination. She's she's on board, she's doing what she needs to do, and she's you know, she's the homeowner that we want to give a loan to because she's committed to the process and she's gonna pay her mortgage, you know. Those are the people that we can work with.

SPEAKER_01 16:41

That's so awesome because I think a lot of people out there think, oh, if I if I'm not approved now, then the lender's not gonna want to talk to me. Why would they want to talk to me for? Right? Can I get out of here? But that's so cool to see that you're actually willing to help these people improve the credit. So hey, maybe not right now, but down the road, they can reach their dream of you know home ownership here in Hawaii.

SPEAKER_00 17:01

Yes. You know, at UH Credit Union, we firmly believe that it's it's an education process that we we work together. You're not just another customer, you're a member. So, you know, you are a member of our credit union. Our job is to not just sell you alone. Our job is to help you through your financial, you know, situations, whether it be opening up a checking account for your kids or getting their first credit card or buying a home, you know, we're we're here for you and educate you through that process. And I think that um a lot of financial institutions they get away from that nowadays, and it's more transactional and not relational. And I think that's one of the things that we're really known for at UH Credit Union is being very relational with our members, and we pride ourselves on that. You're not just a number to us when you call us up. Oh, it's not just Randy Hara, account one, two, three, four, five. Okay, what do you want? You know, it's how can we help you? We'll sit down and talk to you and figure a way through things.

SPEAKER_01 18:00

That's so awesome. That's so awesome. Yeah, that's definitely um kind of an anomaly, you know, in today's market where everyone's kind of focused on the dot and bot, you know, bottom dollar. You're really looking at how can we serve this member? Right? Kind of welcoming them into the family.

unknown 18:16

Yes.

SPEAKER_01 18:16

Yeah. So speaking of credit, like what kind of credit score like do you need to be able to buy a home? And maybe my credit score isn't great now. How do I what's the fastest way to improve that credit score?

SPEAKER_00 18:29

So as far as minimum credit scores, there's no magic number. Um, ideally, though, we want to see something in the 6260 or 680 range at least, depending on the program. Every program has its own requirements. Um so it'll depend on the program. But if you have a lower credit score and you want to increase it, um, maybe you are qualified. But because of that credit score, your interest rate isn't ideal. So we want to work on improving your credit or just it has it makes good sense to have good credit, you know, just overall. Um, so we can work with you on that. I think one of the fastest and easiest ways that people can improve their credit is look at their credit card balances. So um a big factor is what's called like your your revolving credit usage. So we look at your or the credit bureaus when they're figuring out your score, they're gonna look at your overall credit limit. Say you have a credit card that's a 10,000 limit, but you have 8,000 of that limit used. So you're at an 80% usage. Someone who's got only 3,000, so 30% usage, is gonna have a much better score than somebody who's 80% usage, um, only because they see that as a high risk. You know, you're about to max out on everything. We give you all this credit, but you're gonna use it all. Um, so one of the easiest things to do is to, you know, bring that ratio down. That can be accomplished either by paying it down. I wouldn't suggest paying them off, because that can also hurt you.

SPEAKER_01 20:14

Really?

SPEAKER_00 20:15

Yeah, paying them off, or especially paying off in closing credit cards. Um, that can actually end up hurting you. Um, I know it seems counterintuitive, but then they don't know what to make of it. These are all algorithms in the background. So then the system is going, wait, what's going on? He had all this credit, now he's paying it off. What's going on? I don't I don't know how to, I have nothing no information to determine whether or not he's a good repayment of debt. So if you pay off all your credit cards and you're all cash, then how does the algorithm know whether you're good at paying back your debts?

SPEAKER_01 20:54

Wait, so are you saying that I shouldn't pay off my entire credit card like in full?

SPEAKER_00 21:00

You can pay it off in full if you continue to use it.

SPEAKER_01 21:03

Okay, okay.

SPEAKER_00 21:04

But if you pay it off in in the attempt to get your credit score lower and you don't have a history of paying off and reusing it and paying off and reusing it, then the system has a hard time understanding what you're doing. So if you wipe out all of your debt and you have no debt for that system to kind of recognize, then it doesn't know what to make of you. So people will say, Oh, but I have a car loan, which is true, it does help in your repayment history, but a car loan is typically an installment loan, much like a mortgage. And so it's viewed at differently than a credit card. A credit card, your payments from month to month can fluctuate. Yeah. Right? Um, a car loan is usually pretty set. So are you able to manage those fluctuating payments? Now, when you borrow money, when you borrow money for a car loan, Taken out all at once. So you know what you're getting into for budget-wise. But when you spend money on that extra dinner or the the take that trip, that vacation, are you able to pay back that money that you borrowed unexpectedly? That's what the algorithms are kind of looking at. Um, and so that's you know, that's a big piece of what makes up your credit score. Um, so one, like I said, you could pay down your credit cards. The other option is if you have you know a good history with those credit card companies, write to them, call them, or maybe not write to them anymore. You might call them, go online. I think you can even do it through the app on some and just say, hey, I'd like to increase my credit limit. So you have a 10,000 limit and you have 8,000, they bump you up to 15,000. I can't do the math off the top of my head, but that's a little over 50% usage. So I mean, you're in a much better situation. So if you did have to pay down to get it to 50% or 30% credit usage, it's a lot easier to get to that percentage than if you're at a 10,000 credit limit. Right? So you can kind of bump those up together. Um, I've had people that they've had that $3,000 credit limit forever because they got their credit card when they were 20 and they just never sought to increase it. But they go and they ask for an increase, and based off of their income today, they're able to get like a 10,000 credit line. They didn't have to pay a single penny off. They just quickly, immediately changed that um that percentage usage just by increasing their credit limit. Now that doesn't mean increase your credit limit and now let's go, you know, let's take a trip. Um, it means keep your same usage, but utilize that to your advantage to increase your credit score. And sometimes we can see that in as little as one or two credit cycles.

unknown 23:53

Oh wow. Wow.

SPEAKER_01 23:55

Yeah, when I first got my credit card, I would almost be maxing it out. But I'm like, yeah, I'm paying it all off in full, like, doesn't that show that I can pay more off every like I'm responsible with that? But when I found out that actually is bad, I was like, wow, like that's so crazy. Like I thought it's it is counterintuitive, like you said. Yeah.

SPEAKER_00 24:12

The credit companies, they want you to use it. Yeah. They want you to, you know, and so if you can utilize it and you know, you pay it off. We we have this new um credit scoring that came out, um, that's called like trended data. So they do look at your payment history patterns, not just the balances at the end of every month. Um, and that's another thing to consider is when we pull your credit report, it's taking a snapshot in time. So when we pull your credit report, it may show that your credit card balance is $5,000, but you just made a payment yesterday. And so when we pull it though, it it shows the balance and it's basing your credit score off of that, which is also why if you go to a a lender today and then another lender a couple of days from now, you can have totally different credit scores.

SPEAKER_01 25:04

Wow, okay. So walk us through this. Like, if if I know that you're gonna pull a credit, should I pay off my debt or should I leave it? Like what leave it. Okay.

SPEAKER_00 25:14

Because when you pay off debt, that means you're taking from your assets. Now it's your lender's responsibility to be able to direct you as to the best usage of those assets. Is it better to pay off your credit cards and get your credit score up? Because if you already have like a 740 credit score and paying off those debts might bump you up a little bit, but your interest rate and everything, nothing changes. Um, your qualification doesn't change, then why? Why bother, right? But maybe that money could be better used towards your down payment. Or it could be used to buy down your interest rate and get a lower interest rate, which would then benefit you for the life of the loan. You know, you pay your credit cards down now, that saves you today. But how does that help you in the long run?

SPEAKER_01 26:06

Yeah, yeah. Wow. That's that's awesome that you know you're looking at that, right? Because you know, most people out there, including myself, like I wouldn't know what to do, what debts to pay off, and and all of that calculations that you guys are doing on the on the back end that you know we don't see.

SPEAKER_00 26:24

So yeah, we will look at it and say, okay, if we if we cook like say they got 20,000 in credit card debt, okay, if we took that 20,000 and paid it off, how would that impact their monthly payments and how does that impact their qualifying? Okay, that's scenario one. Okay now we took that 20,000, leave their credit card debts where it's at, and we applied it to the down payment and lowered their loan amount. How would that look? Okay, that's scenario two. Now, what if we took that 20,000, had the higher loan amount, kept their credit card debt, and used that 20,000 to buy down their interest rate? How does that look? And what does it look like? Not just in the monthly payments, but down the line for taxes and all of that kind of stuff, those benefits. How does that look for them? And that's really being able to compare the three. Um, and for some people, it really has to be one of those scenarios. Like it has, we have to get your credit card debt down, or we can't qualify you, you know. But then other people, they're in that situation that's like, well, I mean, either thing that you do, or you could just hold on to the 20,000. Like it really doesn't matter, you know. Um, but it's being able to work with an experienced lender who's able to provide you that guidance. I always tell my clients, it's my job to present the information to you and walk you through the thought process. Your job is to make the decision. This is your home, this is your mortgage. I'm not paying it for the next 30 years or however long you get it. You are. So you have to make that decision. It's my job to present information and guidance so that you can make the best decision for you, not for me.

SPEAKER_01 27:59

Yep. Yep. Yeah, that's that's so great. You know, I could spend the next 20 years, you know, learning about all these things, or I could just ask Katrina. Right? Second one's so much easier, right? So I'm gonna do that. Um, let's talk about debt. You know, I think you know, people that have student loan debts, you know, maybe credit card debt. Um like how should people think about that? Like, maybe I have too much debt why I can't purchase. Like, what guide us through someone who has debt and maybe how they should resolve their debt, or maybe it's good debt. Right? Can you help us maybe unpack that a little bit?

SPEAKER_00 28:34

So I'm actually working with someone right now. They've got a lot of debt. It's not bad. They just they went to school, they've got a family, you know, they travel, so they have debt. Um, and what we're looking at is restructuring it, trying to, you know, really guide through, go through their credit card statements. What's your interest rate? You know, well, maybe we could refinance some of these credit cards into a lower interest personal loan. You know, your monthly payments might be about the same, but in the end, you're gonna pay it off a lot faster because the interest is lower. You're just kind of restructuring that. Um, I wouldn't say that excessive debt should stop someone from looking into homeownership. Again, that's where turning to a trusted lender really comes in handy because I mean, I've pulled credit reports and I've done analysis for somebody who's got over 20 liabilities, 20 different, you know, accounts on their credit report, um, that I need to kind of sift through and decide, okay, do we want to pay this one off or do we want to pay that one off? Do we do we refinance the car because their their car loan is, you know, really high interest rate, or or do we leave it? You know, and really just going through that. Or sometimes it's just a matter of, okay, you have a lot of debt, but we can work with that. You know, sometimes we don't even have to do anything prior to going into it. Um a lot of debt does complicate the file, um, but it's not necessarily a bad thing.

SPEAKER_01 30:00

That's so, you know, people hear debt and automatically think it's bad, right? Like, how does how does that work? Like, what is good debt?

SPEAKER_00 30:08

Like, what would you I mean there there's different schools of thought on that? Some people think that like you should never have a mortgage, you know, you should just buy everything in cash, don't charge anything. There's no such thing as good debt. Um, but I think it's a matter of leveraging the availability of funds to your benefit. So again, kind of getting back to the scenario about I got 20,000, do I want to pay off credit cards? Do I want to pay down my, you know, my down payment or get a lower interest rate? Um, how you use your credit, you know, student loans, I think that's a a good debt as long as you pay it back. You know, I mean, who wants to start their career off as an adult with, you know, out of pocket $50, $70,000, $80,000 a year just to get their education so that they can work, you know, but you're utilizing the benefits from like the federal government, the student loans, even private student loans, you're utilizing that benefit, which oftentimes the interest rates are deferred or you know, uh subsidized until you graduate so that you can get your education and get started in a job, and then you start repaying it back. If we didn't have those programs available, that kind of debt available for students, I can see a lot of people not going because it's like buying a house. If you can't, if you had to buy a house in cash, I don't think many of us would own a home.

SPEAKER_01 31:37

Yep.

SPEAKER_00 31:37

You know, so if if students had to pay their tuition out of pocket and there was no option, I don't think we would have as many people going to college and getting educated. Yeah. So those types of debts are good. Car loans, um, I think they're they're good. Um, credit cards are dangerous. It's uh it really just depends on how you're using it. You know, if you get the credit card and then you pay it off every month, so you're not paying interest, I think that's a great usage of credit. Um, even if there's an interest rate on the credit card, if you pay it off within the 30 days, you don't get charged the interest. So charge it and pay it off. I think people who can diligently use their credit card in that fashion um can benefit from it. But people who charge things that can't pay it back, that's dangerous. You know, using it like your checking account, that's dangerous.

SPEAKER_01 32:35

Yeah, yeah. Okay, okay. Uh let's kind of switch gears into down payment. What's like how much down payment do I need? Like, I can't put 20% down. Like, that's too much. Like, what are some options for people out there? And like, what is that down payment that they should shoot for, or maybe that they should at least be a minimum of?

SPEAKER_00 32:55

So we have programs um for first-time homebuyers with as little as 3%. Um, and that's great. You know, that that gets them in the door. Um, and speaking of first-time homebuyers, we have special programs for them that gives them um a discount on their interest rate by you know letting them buy down that interest rate permanently to help them qualify. Um, and so we can do as little as 3%. I would say that the typical minimum that is, you know, that you want to see out there is five to 10%. Um, 3% is good, but depending on the price of the home, that means that 97% is being financed. And that mortgage can be extremely high. So again, it's not a one size fits all. Um, so somebody who maybe recently graduated medical school and they got adopted, they're a doctor, and they have a great salary now, which prior to this they were going to school, so they were broke. Um, they're paying back their student loans, uh, but their income is, you know, higher than the normal. Well, maybe for them, putting the 3% down with a high mortgage payment might be doable because of the profession or the job that they're in, versus, you know, somebody who still just graduated college and doesn't have the money for the down payment, but um, you know, they're they're not making the the same amount as somebody who just graduated medical school, you wouldn't want to overextend them into having that high payment. You know, so um, you know, people who uh I say this because like my daughter is hopefully gonna be going into medical school. She's gonna rack up a whole lot of debt. When she gets out, she's not gonna have any money saved for a down payment. So having a program like this to help her get into the home, putting that 3% down, she'll be able to carry the payment, and that's fine. You know, either way, we're gonna have to qualify you for the the payment. So, you know, that that has to happen either way, but having that down payment, somebody with 3%, you know, in that higher payment, it'll it'll work out. Does that make sense? I don't know if that's it.

SPEAKER_01 35:07

That does, that does make sense. Talk to us about your your guys' first-time home buyer program. Like what are the benefits? How is it different from maybe another company that says they have a first-time home buyer program? Like, walk us through that.

SPEAKER_00 35:20

So, our first-time home buyer program, depending on the um the situation, the borrower's income limits, we have different promotions available for them. So if you are um at or below the area median income limit, you'll get up to one point off of your points. So one point is equal to 1% of the loan amount. Um, but what they often do is instead of taking that money back, they will use it to buy down their interest rate. So they can get a lower interest rate, which helps them to qualify overall. Um, if they make more than that area median income or AMI, then we still have a discount for them. It's just not as much. Um, so that that's the big piece of our first-time home buyer program. But we also have flexible underwriting guidelines, which allows for um, you know, higher debt to income ratio because we understand that they're first-time home buyers. Um, we have the higher um loan to value or low down payment options. So those are all the different benefits that that we offer for our first-time home buyers.

SPEAKER_01 36:26

Where does that half a percent or percent, where does that come from? Like, how do you guys do that?

SPEAKER_00 36:31

It comes from us.

SPEAKER_01 36:32

Wow. So what do you mean when you say it comes from us, like the credit union is helping to pay for that?

SPEAKER_00 36:38

Yeah.

SPEAKER_01 36:38

Wow.

SPEAKER_00 36:39

So it comes out of our bottom line.

SPEAKER_01 36:40

Wow.

SPEAKER_00 36:41

Um, it's just something that we, you know, we get back.

SPEAKER_01 36:44

Yeah. I don't know if there's anyone who does that. That sounds I don't I've never heard of that.

SPEAKER_00 36:48

I mean, there's first time home buyer programs out there. Um, some do different types of promotional rates or discounts, but not to this, not to this amount.

SPEAKER_01 36:59

Yeah.

SPEAKER_00 37:00

You know, you're getting a $500,000 loan. That's $5,000 that the credit union is giving back to you in order to get yourself a lower interest rate so that you can qualify for that loan and keep you. We, you know, as a first-time home buyer, we want to make sure your payments are manageable. So we're gonna keep you in those programs to um help keep your payments low.

SPEAKER_01 37:20

Yeah, because you know, I've heard of like the Hawaii Home Ownership Center, those are like, you know, government funded. So that's where the money comes from. But I've never heard of like a you know, a credit union, a bank, or any type of lender that's willing to actually do that, right? Because that directly affects how much you guys make, your bottom dollar.

SPEAKER_00 37:38

It does, it does. Um it's something that we were cautious about at first, but you know, in the end, it it hasn't hurt us and it's helped us. It's actually helped us to um build that relationships with our members and to have them see us as a trusted advisor. You know, this is something that we're willing to do to help get you. And we've we believe that home ownership um leads to more stable communities. Um, people who live in communities that own their home and are surrounded by others who own their home, they're just more likely to pay attention to their surroundings, care about the roads, care about the people, care about, you know, people walking on the street and help them because it's your community. It's where you've you've set your roots. And if we can get more people to set their roots in Hawaii, then that will help to just build a stronger community all around and support everyone and support our businesses so that people don't have to leave. And you know, and then we lose all of our local people and we lose the aloha spirit that that comes with it.

SPEAKER_01 38:48

Amen to that. Amen to that. Yeah, let's just that was so good. I love that. Yeah, it's really at the backbone of you know our economy of our community, everything, right? Just build on top of each other.

SPEAKER_00 38:59

Yeah, homeownership is so important. Pride of ownership. People want to be involved where they live. So yeah.

SPEAKER_01 39:09

That's so good. That's so good. Um, to wrap us up here, what's something that you think is one of the biggest mistakes that you know people make that's avoidable, um, that you see happening that kind of sets people back in their home buying process?

SPEAKER_00 39:23

I think we kind of touched on this earlier, paying off their debts before talking to someone. Um, you know, people will you can go online and pull your own credit report. So or there's all of these services that say, oh, you can get your credit, monitor your credit. Um, if anybody's ever been a fraud victim of some large company, um they get their free credit report every year. So uh if you do that, people will look at it and go, Oh, I need to pay off my credit card debts. And once you've paid that credit card off, you can't go back to that credit card company and say, hey, you know what? I changed my mind. Can I get my money back? My loan officer said it's better that I put this money in towards my down payment. Once it's done, it's done. Um, and some people will pay it off. Like you didn't know that paying it all off completely and closing it possibly could actually end up hurting you. And once the damage is done, it's done. Then you have to re-establish credit. Um, so I would say people playing loan officer is one of the biggest, most avoidable things, or or talking to people who think they're a loan officer. Family and friends mean well. I know it, they mean well. Um, but they don't always have the most current information or the most sound advice. Just because Auntie bought a house doesn't make her a loan expert or a real estate expert. Um so yeah, just really seeking the advice before you actually make any permanent changes.

SPEAKER_01 40:49

Yeah, because once you do it, you can't take it back.

SPEAKER_00 40:51

Yeah. Yeah.

SPEAKER_01 40:52

So you want to make sure, you know, you speak to someone with a Katrina that can guide you to make those good decisions. Yeah. Beautiful, beautiful. Anything else you want to mention before we wrap up here?

SPEAKER_00 41:03

Um, no, I think the biggest thing is that, you know, when you're shopping online, um, looking for a mortgage, don't trust whatever you see online. Oftentimes, the rates that you see online, they're marketed for general situations and they're presented as best case scenario. Um, so when you when you're shopping online, it's so important to talk to a loan officer because they really know the ins and outs of their programs and they can get you the actual rate that applies to you. Um and then just partner with somebody who really knows what they're doing, and it's gonna be there as a trusted support for you through the process. Buying a home is a stressful process. Um, but people like you and I, we do it every day. So we know how to navigate through those, the contract requirements. We know how to navigate through all the different ins and outs of it and let us take on that stress. Um, don't try to wear that hat. You need to focus on, you know, um finding the home that's gonna be your home for your family and let us deal with the details of of how to get that done.

SPEAKER_01 42:08

Yep, yeah. You have your job, we have our job, and you know, we can do our job pretty well. So awesome, awesome. Uh so for people out there that's listening that, you know, want to speak with you, Katrina, or want to get connected with the credit union, how should they do that?

SPEAKER_00 42:21

Oh, well, uh, you can call us, um, 808-983-5500. Or you can go online at www.uhfcu.com at uhfcu.com. Yeah.

SPEAKER_01 42:37

Awesome. We'll make sure to put that in the description as well. So if anyone is interested, I'll go ahead and reach out to them. They can be a great resource for you. Well, thank you, Katrina, for joining the podcast.

SPEAKER_00 42:47

Thank you for having me.

SPEAKER_01 42:48

Yeah, awesome. We'll see you guys in the next episode. And of course, if you liked uh what you heard, go back, listen to our previous episodes, or you can reach out to us um in the link in the description as well. Alrighty. Thanks guys. Take care.