First-time buyers's travails

Learning what's available and possible in a seller's market can be daunting, but there's help out there

October 30, 2005|By RYAN BASEN | RYAN BASEN,SPECIAL TO THE SUN

Shante Thompson had a heck of a time trying to buy a house. The Randallstown native spent 18 months talking to real estate agents, shoring up her financial profile, touring neighborhoods and making offers.

By the time Thompson, 32, settled on a three-bedroom townhouse for $185,000 in Windsor Mill in August, she was just as relieved as she was excited to be buying her first home.

The homebuying process drained her - and taught her a few lessons.

By the end of it, "I had to be more aggressive," she said. And "I lowered my expectations in what I was looking for."

Like Thompson, many would-be homeowners feel under-prepared, under-financed and overwhelmed. With housing prices in the Baltimore area rising at a double-digit pace (the average now exceeds $300,000), many are struggling to find houses they can afford.

But even in the hot seller's market, experts say, many first-time buyers can find a suitable home if they are persistent, organized and patient, and take advantage of programs available to help them.

"There's a lot of people around that don't realize they can own a house," said Irene Mabry-Moses, of Faith Realty in Parkville. To get one, "buyers should be careful and they should take their time."

Exercising caution and patience are paramount, but that can be particularly hard for first-time buyers, who often find the quest for a home to be an emotional roller coaster.

On top of that, they face major hurdles, according to many experts - coming up with enough money up front and figuring out which mortgage loans would be most beneficial for them.

"The affordability of housing in this area is not so great," said Jason Abell, a local lender with Wells Fargo & Co. And, in general, "with first-time buyers, there is some hand-holding that needs to go on that doesn't happen with other buyers."

Joe and Sally Maybury learned that firsthand when they set out to buy in Howard County after she switched jobs in July. With the average sale price more than $400,000, the county is particularly challenging.

The Mayburys signed up for a county class for first-time homebuyers, where they met their future Realtor and lender. The class also helped them to find a financing option that enabled them to buy a single-family home in Elkridge for $362,000 - a step up from the townhouse they initially thought would be all they could afford.

"We were unsure of what we could or couldn't do," Joe Maybury said, "so we took the mortgage seminar."

A conventional 20 percent down payment would have meant $72,400 in cash, and a low down payment usually requires costly private mortgage insurance. The solution for the Mayburys was a conventional fixed-rate mortgage that covered 80 percent of the house's cost coupled with a "piggyback" 10-year adjustable-rate loan to cover the remainder. That meant they didn't have to come up with any cash for a down payment or buy mortgage insurance, though they did pay about $10,000 in closing costs.

"We had money down that we could have thrown out there but because we took the mortgage class, we were told upfront it's not always wise to put money down," said Joe Maybury, a 28-year-old financial analyst. "We're young people. We don't have a lot of money. We didn't want to put all of our money up right away."

They were immediately glad they hung on to their cash because they ended up replacing the heating system and several appliances in the seven-year-old home.

The lesson for Joe Maybury was "not to throw all of your eggs down on the first shot. You've got to save money for the unknown, at least for the first year."

Research and patience were keys for Stephen Brvenik, 22, who scoured the Internet to learn about home prices, Realtors, lenders and mortgages.

Brvenik then targeted his search to specific areas of Baltimore and determined how much money he'd need.

"A big part of the homebuying process is looking online, first of all," said Brvenik, who recently bought a two-bedroom townhouse near Patterson Park for $235,000.

Brvenik, a leasing agent for Prime Retail Inc. in Baltimore, also relied on an experienced real estate agent and had his parents recommend a lender, which expedited the process, he said.

Brvenik also invested time and shoe leather. He spent about a month looking at dozens of houses, touring many of them with Kevin Willner, a Long & Foster Realtor, nearly every day after work and on weekends.

Brvenik eventually zeroed in on the Patterson Park area in part because he believes values there will keep rising. That's important, he said, because that first house will eventually provide the equity for moving up.

"You should be very cautious about where you're buying," Brvenik said. "It's a huge investment. It's a lot of money,"

Indeed, those six-digit price tags can be intimidating to young people, whose largest costs are often triple-digit student and car loan payments. Figuring out how much you can afford ahead of time can be key to not getting thrown off course by prices that seem to vault upward overnight.

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