MY TOP 10 FIRST TIME HOME BUYER MISTAKES!: Lessons Learned From My First Home Purchase in Hawaii!

Here's a video of the top 10 first time home buyer mistakes I made and the lessons I learned so you can avoid them! Follow me on instagram: @ kikoga

1. Research and Understand All The Terms
As a first time homebuyer don't make the mistake of not understanding all the new terms that come along with purchasing a home. What is a mortgage? What is it made of? What are escrow fees? Knowing terms like principal, interest, points, closing costs, escrow, PMI, etc. just help you make better decisions in real estate and real estate investing. Educate yourself and understand all of these so you can ask good questions.

2. Know About Closing Costs
I made the mistake and didn't know anything about closing costs at the beginning, I just thought that you just get an interest rate at closing and that was it. Little did I know that my closing costs were about $12,000! So make sure you ask and understand what you are paying for. Especially when you are buying your first home and are saving for the downpayment, you also need to make sure you are planning for the closing costs. For Hawaii, closing costs are supposed to be closer to 1% of the loan amount.

3. Running the Numbers on Monthly Payments
If you're buying a home for the first time, or just in general, make sure you actually go through the process of running the numbers. Understand what interest rate will get you your desired monthly payment and know what your cash flow will be on your rental property. If you are doing a quick turn around, it makes more sense to pay less points so less of your money is tied up in the property for the short period of time.

4. Get Prequalified
Going through the prequalification process helps you be prepared for your home purchase. Especially if you are new to real estate, getting pre qualified lets you know how much house you can get a loan for so you don't waste time looking at homes our of your range. In real estate and real estate investing, timing is everything, so when you are pre qualified it helps your process go much more smoothly. You also don't necessarily have to finance with the lender that pre qualified you.

5. Private Mortgage Insurance (PMI)
If you don't have 20% down on your first home purchase (can be typical for first time homebuyers if there are programs out there), you will have to pay PMI which for me was another $110/month. Unless you are planning a quick flip/rental, it may make more sense to get the 20% down so you don't tack on extra fees to your monthly that you'll pay for years.

6. Shopping Lender Numbers
When getting a real estate loan, you can shop the interest rate numbers to different lenders. In a lot of cases they may actually expect this. Just be up front about it and let them know; it helps to give them an incentive of competition to get you their best number. I made the mistake of just going with the first lender and didn't give myself an opportunity to challenge cost.

7. Truly Knowing Your Property and Location Value
In real estate and when you are a first time home buyer, it helps to know value. Especially in real estate investing, ideally you want to buy an undervalued house in a decently high valued area. Do the research, it'll help you be prepared. Actual good deals in real estate are rather hard to find, so you just need to keep searching and educating yourself on value.

8. Parking Stall Value
This is more specific to buildings, but you parking stall matters and is often overlooked. The floor its on, the size of the stall, the number of stalls per unit all matter especially in areas like downtown Hawaii where stalls can rent for hundreds a month. EV charging stations in newer buildings may be a good investment.

9. Maintenance Fees and How They Go Up
Condominium maintenance fees always go up, so when you are doing real estate investing with condos, you have to consider that in your monthly projections. There can be times when your maintenance fees increase within the first year. You don't want to make the mistake of underestimating maintenance fees in the long run.

10. Don't Always Believe The Sales Pitch on New Builds
The sales people for the building don't know what's actually getting built. Real estate developers are likely trying to sell you something that they don't exactly want to pay for. Budgets normally control what goes into your property, and that's not something the sales people usually deal with.

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