My future wife got pregnant and the two-room apartment was soon too small for our growing family. The builder offered me an incredible deal on a four-bedroom. Projects in the garage with music blasting, backyard barbecues … life as a homeowner was just perfect – until suddenly it wasn’t.
By the summer of 2007, construction slowed to a screeching halt. Homes were not selling and we could not continue to build. Layoffs enveloped my industry. In December 2007, I joined their ranks. The builder boarded up all the unfinished homes and left Nevada. It was the middle of winter and we were expecting our second child. My wife and I panicked about the loss of our only income.
For the first time, I was late on a mortgage payment. Unemployment benefits were just enough to put food on the table and pay for life’s necessities. Pretty soon, I couldn’t make any of our mortgage payments. My wife and I took turns calling the mortgage company. Their “customer service” representative robotically spieled off a list of our missed payments, interest and penalties. We might as well have been dealing with a computer versus a human being.
Six months later, my unemployment ran out and I was still jobless. Five different credit cards were maxed out with medical and living expenses. The notice on our door gave us 21 days until foreclosure. Defeated by reality, we moved in with our in-laws. Our house foreclosed and sold for less than 50 percent of what we paid for it.
Three years later, I have been gainfully employed full time and we want to look into home ownership again. Is it even possible?
Dear Freddy: Congratulations on securing a full-time job, especially in our current economy. Unemployed construction workers make up a significant part of Nevada’s unemployment rate.
To answer your question Freddy, yes, home ownership is absolutely possible for your family. The federal guideline on granting a new consumer loan after foreclosure is three years. For you, that is in June. This is the ideal time to check and clean up your credit, especially any 30-, 60- and 90-day delinquent accounts.
You have two choices here: One is an appointment with a local lender to run and review your credit. They will offer suggestions on how to clean it up by paying off or paying down your old debts. This route can take six to nine months or longer and requires patience. But if you have the time and keep up with all the paperwork, you have nothing to lose.
The other choice is to pay a professional credit repair company a small fee. The difference from the first choice is they take over the cleanup and disputes for you. You do nothing. This route is much faster — usually three to six months.
When I met with Freddy and his wife, I learned that they would like to buy as soon as possible while the home prices are still low. Freddy has also been watching the market and the slow rise of interest rates.
He currently is paying $900 for a rental home without a yard or garage. He is comfortable with a house payment up to $1,100 for a home with a garage and a decent size yard.
Here’s where it gets tricky. Although Freddy has been back to work for two years now, his wife does not work and they usually have very little money to spare by month’s end.
Fortunately, Freddy qualifies for a first-time homebuyer program since he hasn’t owned in three years. The program includes a $5,000 grant that doesn’t require repayment and $15,000 loan forgiveness over 15 years. Qualifying homes are located in the low-income neighborhoods of Sparks, Sun Valley and North Valleys.
The couple’s credit was quickly cleaned up by a local lender. They did have to pay down some higher balance credit cards to raise their credit score to 620.
Freddy and his wife are on track to receive a pre-approval letter for a low rate fixed-payment home loan by June 1.
Credit cleanup is easier than you think. In this buyer’s market, it is cheaper to own than to rent. Check it out while interest rates are still low.
Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps clients with everything from buying and selling to foreclosure and short sale. To submit a question to her, call 351-5117. Her website is www.anniechristian.com.