Affording the dream: Simple rules help first-time homebuyers make it happen (1134)

Jul 23, 2008 7:31 AM - Despite a troubled housing market and the rising costs of food and gasoline, the couple, both 28, figured out how to make their first home affordable with the help of a trusted financial adviser and other professionals.Now, the Burlingames and their two cats are in the perfect house % a two-bedroom bungalow on North 12th Street in DeKalb. They watched their credit score and opened a savings account to make a 20 percent down payment, and since moving into their home in June, are spending about one-third of their monthly income on housing costs.We knew we wanted to buy one, but had really little idea of how to do it ourselves, Jacob said as he sat at his kitchenThe U.S. Department of Housing and Urban Development defines affordable housing as not costing more than 30 percent of a households income. This includes rent or mortgage payments, utilities, property taxes and insurance.

Similarly, real estate agents commonly calculate monthly spending on a house with a slightly lower number % about 28 percent of monthly income, Sycamore real estate agent Diane Hammon said.But a decision on a home goes beyond numbers, she said. When she showed the Burlingames the bungalow on North 12th Street back in March, she knew and they knew that it was the one.Affordability, Hammon said, means being able to get into a house.This is where ability can fall short of availability. There is available housing in DeKalb County: A point-in-time look on July 8 shows 685 single-family and multifamily dwellings for sale, according to a local multiple listing service database.But only 56 of those were in the process of being sold. As in many areas throughout the country, the housing market in the county is facing some challenges during a tough economic climate.

Bob Rosemier, who chairs the DeKalb County Health and Human Services Committee, called this a housing crisis.Not a crisis in the sense of availability of houses, he said, but a lack of action.Tough timesHomes priced around 200,000 and lower are selling in the county, said Diane Hammon, a real estate broker for ERA Elite in Sycamore and immediate past president of the DeKalb Area Association of Realtors, but anything priced between 200,000 and 500,000 isnt.It can be tough to afford a home during tight economic times. Paying more for other items can make it hard to save for a down payment, or to make sure money will be available for taxes and other expenses once a home is purchased.The DeKalb County Housing Action Coalition, a volunteer group that studies housing costs compared to income, reported that since 2000, the average sales price of homes in DeKalb County increased by more than 50 percent, while the median family income rose less than 13 percent.Younger adults can be especially hard-pressed when it comes to buying a first home. College graduates are leaving with an average of 19,200 in student loans, according to The Project on Student Debt, which can mean waiting longer before pursuing the purchase of a home.Other homeowners of all ages who have gotten into financial trouble may have been reaching for the Joneses, Hammon said, and not using realistic affordability measures.A housing affordability study by the city of DeKalb found that a DeKalb family with an income of 53,000 could afford % given the 30 percent guideline % a 130,000 home, paying a 5 percent down payment and taking out a mortgage for the rest. That would mean paying about 1,475 a month, according to the study.The Burlingames were originally given a budget of 105,000 from their financial counselor, but after seeing few options in that price range, continued saving money. The house they moved into in June was listed for 149,000 in September. Their purchase price was 120,000.

tastey pony wrote on Jul 21, 2008 1:54 PM: I just checked the MLS system and found several homes for sale in DeKalb for $130k and under. Some of them were even outside the downtown ghetto area. Anyone with half an ounce of personal financial responsibility should be able to afford one of them. If not, then odds are you made some serious mistakes at some point in your life.No, you won't be living in Heron Creek at that dollar amount. But it beats renting or living in a single-wide surrounded by trailer trash.

tastey pony wrote on Jul 21, 2008 10:09 AM: If I were looking for advice as a potential first time home buyer, the last people on earth I'd listen to are mortgage brokers and real estate agents. Both of them make their livings by selling you as much as they can, despite whether or not you can actually afford it. We can probably throw developers on that list too.It would be like asking a used car salesman if you should buy the cheap or expensive car on his lot.

boomer44 wrote on Jul 21, 2008 8:30 AM: Another story without checking the information Mr. Reporter. 685 homes on the market but only 56 are in the process of being sold. This is only the homes that are going through realtors when they talk of in the process. Many people are feeling out the market to see if they can sell. Many are homes that people bought thinking they could afford the bigger size home. Mrs. Hammon is wrong about the under $200,000.00. We just had several homes at $235,000 to $242,000.00 sell in our neighborhood. They were on the market for less than 5 weeks.

Calypso wrote on Jul 21, 2008 7:01 AM: Happy, I totally agree. 30% might be OK for renters, who don't have to worry about maintenance, but not for owners. For the sake of all the 'what ifs' people should not buy as much home as they qualify for.

dekalb bee wrote on Jul 21, 2008 5:57 AM: Affordable new construction equals:a six week wait to get a DeKalb building permit, taxes that have nearly doubled in six years,leaky drafty windows making a COLD house in the winter, rusty water and low water pressure,and a neighborhood that was engineered by the city so that homeowners needed to put in $1,500-$3,000 retaining walls.Let's face it, alot of guys got into the building industry in this town who shouldn't have, and code enforcement let alot of stuff slip.

bigdekalbdotcom wrote on Jul 20, 2008 4:57 PM: BTW.. Diane Hammon made a huge mistake in one of her statements.She stated Affordability means being able to get into a house... No it means being able to STAY in a home.Many can arrange the chairs on deck to get into a home, the problem is that with rising utilities and property taxes many are having trouble meeting their liabilities.The last thing young/first time homebuyers should do is buy an older home.With older homes comes higher maintenance and utility costs.These are the hidden pifalls that 1st time buyers arent prepared for.Affordable New construction is the answer for newbuyers

bigdekalbdotcom wrote on Jul 20, 2008 4:43 PM: its to bad the city is doing its best to keep attainable housing away from DeKalb.It would be feasible to have homes on the market in the 90-125K range (with Dekalbs demographics that should be the norm) if the city worked with the building community instead of fighting with them.One creative thing they could do is to create a point system for impact fee's.. X amount of dollars spent at local lumber stores = a reduction in fees.Its win-win, builders will be abl;e to offer an affordable product and generate jobs, and the city gets sales tax revenue .

Calypso wrote on Jul 20, 2008 9:53 AM: Sue Guio is still working for the city I thought she was one of the people planning to retire in order to avoid layoffs due to the budget crisis.

HappyGoLucky wrote on Jul 20, 2008 3:42 AM: 30% in my opinion puts us right back in the whole many people have found themselves in... buying too much house and having too little income...Sure you can get into a home for cheap if you take an ARM,but in my opinion ARM's should only be used for those flipping those houses, and going onto another home quick...For those staying in the home longer than 5 years,just take out the 30 year 15 year or 10 year...if you can't afford the payment on those terms,you should not be buying a house!