Purchasing a home may be easier than you think

By Jennifer S. McDonald
C & G Staff Writer

It’s the American dream, but many don’t understand just what goes into buying a house and making it a home.

While many buyers may find it difficult to accumulate enough money for a down payment, local experts agree that with a little discipline and creative strategies, you might be able to come up with more cash than you think.

Cheryl Krysiak, a housing educator with Macomb County’s MSU Extension, said the first thing to do, if you’re even thinking about buying a house, is to get your finances in order. As a general rule, people should theoretically spend only 30 percent of their gross pay on housing and 11 percent on all other installment debt, such as credit cards, student loans and vehicle payments.

While this may be hard to imagine, Krysiak suggests keeping a running tally of all the things you purchase each day. That way, it’s easy to see where your money’s going, and what you could easily eliminate.

“(People) tell me they know they’re working harder than they ever worked and they’re making more money than they’ve ever made, but they aren’t living any better,” Krysiak added. “Until you take the time to write it down, which most people don’t want to do, you’ll never know where that change from that $20 goes. A lot of times people say, ‘Oh I had no idea’ or ‘ I can stop doing that for a year to save money for a house.’”

The next step is to not only identify your long-term financial goals and make a home-buying savings plan, but to stick to it. If you decide to open a savings account just for the purpose of saving money, make regular deposits and leave them there, Krysiak said. It also helps to pay next month’s bills with this month’s pay, she added.

The goal is to have a very boring financial life, Krysiak said, and it will pay off in the end.

“It’s not party hardy this week, then next week you don’t eat,” Krysiak said. “Some people will never change because of how little they make, but some folks can. It may not give you more money, but it will give you a feeling of control over what money do you have, and that can make all the difference.”

When the day comes to make the leap to homeownership, there’s nothing better than talking with a qualified home loan officer, said Tim Smith, branch manager for Bloomfield Hills Countrywide Mortgage. Getting pre-approved early in the process may be the difference of purchasing the home of your dreams or walking away empty-handed.

“You really don’t want to go out looking and fall in love with something, only to find out you don’t have enough funds, or your credit isn’t quite where you thought it should be, or you’re unable to complete the transaction,” Smith added. “It also enhances a buyer’s ability to present an offer — if two offers come in on a house, and one’s pre-approved and the other isn’t, the pre-approved offer is going to be worth more to a seller.”

A home loan officer can also help a potential homebuyer budget money coming in. In Countrywide’s case, they offer budgeting through the Home America Counseling Center to help homebuyers accumulate a down payment or improve less than perfect credit.

“If there’s a difficult credit situation, then knowing how to come out of that is important and in their quest to own a home we can actually work with people to help put them in the position they want to be in,” Smith said. “We want to help people understand what it means to budget and what it means to own a home before they enter into it. We hope to help them understand the whole cost they’re walking into.”            

Even if people think they have absolutely no chance of ever purchasing their home, it’s almost never the case, Smith said. There are many other options to help everyone, he added.

“People shouldn’t assume they cannot buy a home. There are other options out there,” Smith said. “Many will borrow against their retirement accounts, some will sell an asset like a car or a motorcycle to help accumulate money. Gifts from family and relatives are acceptable. There’s even a program through the Federal Housing Administration that allows a low down payment with less than perfect credit. You don’t have to put 20 percent down like many people think.”

For more information about Countrywide Mortgage, contact Smith at (248) 203-6020. For more information about Macomb County’s MSU Extension, visit www.macombcountymi.gov/msuextension.

You can reach Staff Writer Jennifer S. McDonald at jmcdonald@candgnews.com or at (586) 279-1112.