Readers Tell How They Bought First Homes : GETTING IN: A follow-up report on how to buy a first home in today’s tight real estate market.

When we published our special report last month on buying a first home, we asked you to tell us how you bought your first house--and did you ever.

The Times received dozens of responses from readers across the Southland, some of which appear below. By and large, most of the letter writers did exactly what the experts in the article advised today’s would-be buyers to do:

Scrimp and save to raise a down payment and don’t expect to get a “dream home” the first time out.

Nearly all the readers who wrote say they made compromises to buy their first home. Some purchased “fixer-uppers,” others bought lower-priced condominiums and a few even weathered the often-frustrating process of buying foreclosures.

A few bought their first home utilizing more offbeat methods. One purchased a house with a co-worker nearly four years ago, and they are still sharing the home today. A married couple borrowed money against their life insurance policies to help with the down payment.

But some things never change: About half the letter writers said they got at least some of the money for their down payment from their parents.

Here is a sampling of helpful advice from readers to readers.

-- The Editors

My wife, a registered nurse, and I, a loan officer, bought our first home in December of 1985 in Pico Rivera in a new tract.

There are about 225 homes, averaging 1,473 square feet. The houses were being sold at $132,000. We only put in 5% down plus closing cost; our total cash out was $12,500. Our loan amount was $125,000.

Although our housing ratio was acceptable, our total debt ratio was high due to the fact we were paying for two cars. The loan officer suggested that we could still qualify if we had another co-borrower. My wife had a college classmate who was single and also a registered nurse. With her as additional co-borrower we easily qualified for a $125,000, 30-year loan graduated payment mortgage (GPM).

Our down payment was borrowed from my brother, who executed a gift letter. A couple of months after the loan closed I prepared a quitclaim deed, which was signed by our co-borrower friend. After recording the same with the County Recorder, my wife and I are the only title holders on record. Homes in our tract are now listed at $225,000. We repaid the borrowed down payment from a tax refund.

JOE DIAZ

Pico Rivera

I saved for years before finally purchasing my own home. And, like many young people starting out, I looked at condos and townhouses, but I managed to get a single-family home.

I’m single and have worked in the financial services industry for five years. As each year went by, my savings grew, but I felt like I was continually falling behind in the real estate market. Finally, I decided now is the time--regardless of what type of property that I could afford. I was already late getting into the home buying game, and if I waited much longer, I wouldn’t even be eligible to play!

I recommend to any first-time home buyer:

1. Do the dirty work. Save for the down payment or find one of those equity-sharing deals or whatever it takes to make such a large investment. I took advantage of my employee loan benefits program (no points, discounted interest rate, etc.) and some help with the down payment from my family.

2. Know why you are buying. What are your priorities? What is most important to you and what can you live without? My priorities were investment first, place to live second, comforts/extras third. Knowing your priorities can be invaluable in helping you make your final decision--because compromise is inevitable.

3. Prepare yourself psychologically as well as financially to buy. It’s a gutsy move that shouldn’t be taken lightly, but in today’s market “He who hesitates is lost.”

4. Get a good agent. Mine was tops. Her name is Karen O’Connell, and I would recommend her to anyone looking for a single-family home in the Glendale/La Crescenta area. I think the good agents rely on referrals and will do their best to have long-term, happy clients. Tell your agent everything you can about what you can afford, what you want and again, what your priorities are. They can also help educate you on what the market is doing, what price range is realistic.

5. Be patient and keep an open mind. I was patient and it worked. I put in an offer, a counteroffer was made and within hours they had already received several other higher bids. The offer they accepted from someone else fell through, so I resubmitted my offer and they accepted.

Although I was looking for a single-family detached home, my price range limited my options. My agent showed me a property way above my price range, but it had two older single-family homes (one that I could rent out). This was not what I originally had in mind, but this kind of property enabled me to get the kind of home I wanted (with the income from the rental helping me qualify for the loan). I even got the “extras” that were last on my list of priorities, like a Jacuzzi, walk-in closet, built-in storage, attached garage and more. If I hadn’t kept an open mind, I never would have even looked at this type of property.

VALERIE J. dePOURTALES

Montrose

VA Repossession Was Her First Home

I bought my first home in December, 1977. At that time prices had started appreciating. I had a 1-year-old son and lived in an apartment in Inglewood, and since rents were going up rapidly, I started house-hunting. Nice homes were going for about $45,000, or more.

As that was out of my range, I opted for a good location in SouthWest Los Angeles, which was about 10 miles from my job and near my baby-sitter. I bought a repossessed home from the VA for the asking price of $32,500, with only a $1,000 down payment.

I’m a secretary for an aerospace company and this business is a volatile one, therefore opportunities for advancement don’t always exist.

I asked a friend what I should do to further my career. He suggested in late 1981 that I buy more real estate. I decided to take money I had gotten from being laid off a couple of years earlier and bought a second home. I moved into this home and rented out my first one.

I started taking classes in real estate, including property management. Later that year the tenants in my first home moved out. I decided to move back in. The second house was in a good enough condition to rent. I simply gave it a nice face lift.

Early in 1985, I pulled out equity on my two homes and bought a third home. So now I have three single-family homes.

In the fall of 1986, since rates were coming down and it was a buyer’s market, I bought a triplex in which I have two senior citizens and a low-income person as tenants.

My recommendation to a person that doesn’t have a lot of money is to buy in a good location that hasn’t appreciated a lot, then either take out equity when the area picks up and buy something else or move on.

Also, begin networking with people in the business, such as your local real estate salesperson and mortgage bankers. If you feel you would want to pursue dealing with income property, acquaint yourself with people in the property management field, landlord associations and find out all you can about the risks/rewards in this enterprising industry.

B. ALEXANDER

Los Angeles

Shared Home Cheaper Than Apartment Rent

Here’s how I (we) purchased a first house:

A friend at work and I decided to purchase a home together after renting separate places. I’m 27 now, he’s 29. We closed on the house in December, 1985. It is a three-bedroom, two-bath, with a large lot and pool in Rancho Cucamonga. Purchase price was $93,500.

We financed with an FHA loan with minimum down, and our total closing costs, including the down was $6,900. We paid all the points. The present value of the home is $145,000, easily. We are tenants-in-common. The total monthly payment is $1,036 PITI (principal, interest, taxes and insurance).

We have a detailed agreement that spells out exactly how equity will be paid out in the event one of us wants to leave. It has been 3 1/2 years and all is well.

An important point: It is cheaper for either of us to share this house than to rent. A one-bedroom apartment rents for about $525 a month. Here we have a yard, pool, attached garage, an office and appreciation of about $400 after taxes.

Advice: This plan may not be suited for everyone. There must be trust. It is probably better if the buyers aren’t best friends.

LARRY KROLL

Rancho Cucamonga

Strategy Paid Off for Home Acquisition

When my husband and I married in March, 1987, our first priority was buying a house. Our annual income at that time was $62,000. We had a savings account of about $6,000. Here’s our strategy:

1. Live in a “cheap but not awful” apartment. We moved into an apartment that we could live in comfortably, although not luxuriously, while we planned to save money. Our rent was $800 per month for a two-bedroom apartment (compared to $950 we were paying). Therefore, we could put that $150 extra into the savings account each month.

2. Increase monthly cash flow. Our monthly debts totaled $550. I refinanced the loans through my credit union, secured by the $6,000 savings, for an interest rate of 7%. Cash savings per month equaled $300. Add this to the rent savings, we were putting $450 a month into savings. We had already been putting away $550 a month, so we were now putting $1,000 a month into savings.

3. Put every extra penny into savings. We managed to earn about $11,000 in overtime and consultant fees during the year. Some went to lower our credit card liabilities, most went into savings.

4. Eradicate credit card balances. Because we wanted to qualify for a loan for as much as possible, we made a concerted effort to bring our credit card balances to zero.

5. “Borrow” money from folks. Although neither one of our parents could really afford to give us money gifts, they did anyway. We got $6,000 total and got them to sign the bank’s gift letters. We were determined to repay these gifts after we got settled--and we did--with interest.

6. Borrow against tax-deferred annuities and life insurance policies. The tax-deferred annuity made a big difference. We borrowed $5,000 from it, the interest and principal we pay back is to ourselves, and the IRS says it only needs to be paid back within a “reasonable period of time,” which could be translated: For a house purchase, you could amortize it over 30 years. We borrowed $1,500 from two small life insurance policies but every little bit helped.

7. Shop around for loans. The rates, points, terms and up-front fees vary considerably. Don’t pay PMI! (private mortgage insurance).

8. Get pre-approved. We did this to alleviate any fears of not qualifying for sellers, especially since we had only 10% down.

9. Look for “For Sale By Owners.” Although we worked with a real estate broker, we eventually found our house for sale by owner. We paid $173,000 for it--but had we gone through a broker, it would have easily cost us $190,000. (The appraiser told us it was undervalued.)

10. Buy a small house, not a dream house, in a nice neighborhood that you can live with. Compromise, that’s important. We found an adorable 1,200-square-foot Spanish-style house in a nice neighborhood in Pasadena.

11. If it’s your first, put 10% down. Between 10% and 20% down, the monthly payment difference isn’t that much, and you can’t save fast enough to keep up with the appreciation for 20% down. Don’t let anyone (especially realtors) tell you you’re wasting your time trying to buy with 10% down.

In sum, hock everything you have to get into anything as soon as possible. We’ve lived in our house exactly one year this month and I am shocked, surprised and delighted to say that comparable houses on my street are selling for $260,000, $285,000 and the one across the street is on the market for $322,000.

The value of our house has increased 50%! Although we cannot afford a larger house now, the equity growth will allow us to move within a couple of years or to add on a couple of rooms (which is a real possibility since we love our neighborhood and neighbors).

CINDY BLOOM

Pasadena

Bought First Home While in College

My first home purchase was at age 18 as a college sophomore in San Luis Obispo. I had read William Nickerson’s book, “How I Turned $1,000 into $1,000,000 in Real Estate in My Spare Time,” and I was highly motivated to get into real estate ownership.

My enthusiasm was somewhat tempered by my realization that the days of $2,000 “fixer-uppers” mentioned in the book were in the distant past.

Still, with assistance on the down payment from my father, I was able to purchase a $39,000 home in 1975. My college roommates paid rent that made the mortgage payments. I performed fix-up work on the house, such as new landscaping and paint. Upon my graduation in 1978, I was able to sell the house for $71,000.

I was tempted to spend the profits on a new sports car, but I resisted the temptation and bought another house. I continued to buy cosmetic fixer-uppers, fix them up and sell them at a profit. Eventually, we bought our “dream home” in Rolling Hills.

My advice for today’s potential home buyers is to get into the real estate market as soon as possible, possibly during their college years. I would offer the following advice:

1. Buy your house in an area that is close to your college. This is important so that college and your education maintains as the primary focus.

2. Buy a house that needs cosmetic fixing-up. This housing offers the best profit potential, and you won’t be too concerned if the place gets dirtied during college partying!

3. If necessary, get financial assistance from parents for your college-age first home purchase. During this period, all housing costs that would have been paid for rental housing can be applied to your first home.

4. Stay in the Southern California real estate market. If you sell your first home, buy another. Resist the temptation to cash-out early; don’t spend your real estate money on fancy cars or consumer goods.

Keep in mind that the real estate cost cycle in Southern California always trends upward and that the 2, 3 or 4 years that you gain by being in the real estate market during your college years can be pivotal to your long-term Southern California housing goals.

DAVE MOINE

Rolling Hills

Set a Goal, Bought Directly From Owner

I bought my first home in 1978 at the age of 22. At the time I was living in Scottsdale, Ariz. Here’s how I did it:

1. Set a goal. I was determined to rid myself of apartment life and made it a goal to buy a house within six months.

2. Do “homework.” I did a thorough assessment of what I could afford and what type of home I desired. This involved evaluating my income, savings, debts, knowing what lending institutions required to obtain a loan including ratios, documentation, etc. and the types of loans available.

3. The search. I decided to go the “By Owner” route and avoided any involvement with real estate brokers. I felt this afforded me a better opportunity to cut a deal on a price below the market. I set geographical boundaries where I knew I could afford to live and focused my efforts on driving through neighborhoods and even asking neighbors if they knew of any homes coming up.

There was a cost for this “by owner” strategy, and that was time. Fortunately, I had it and used it to my advantage in scouring neighborhoods. For example, on the way to and from work, I would take different routes in areas I liked which were in my general price range.

4. The purchase. The “drive around” strategy eventually paid off, because one day I noticed a “By Owner” sign. I immediately looked, ended up liking the home and made an offer. The home was built in 1953 and needed cosmetic work, but it was in a great location, with three bedrooms and two baths.

Since I was the first person who looked, I wanted to be sure the sellers wouldn’t back out before the contract was signed, so I spent time in getting to know them and delivered flowers the next day in appreciation. The contract was signed that afternoon at a purchase price of $37,500 (asking was $39,000). Sure enough, the next day the sellers informed me that they had a back-up offer for $5,000 more.

5. The loan. My goal was to get in with as little down with lower initial monthly payments, since I knew I would not be in the home for more than two years. It was a starter only. I went through a mortgage broker and got a 90/10 graduated loan through the government. At the time, I believe it was called an FHA 345. My down payment came from savings and the sale of a car that I no longer needed.

BILL COVENY

Los Angeles

Moved In With Parents to Save Down Payment

I bought my first home in 1981. To do it, I moved back home with my parents and saved the money I was paying on rent. Before I moved home my rent was $425 (within six months I increased this savings to $500).

Toward the end of the year, relatives told me of a foreclosure with an 8% assumable loan. After contacting the owners, the lender and going through an escrow company, I had bought my first home. However, since it was not close to my job, I rented the house out. I increased my savings to $600 a month. My father requested that I only pay the water bill and encouraged me to save every penny I could afford.

Within two years, I was looking for my second house--I had saved a little over $15,000. A realtor showed me apartment conversions, probates and homes in areas that I did not feel comfortable with.

Disappointed, I decided to look for a house on my own through the newspapers. On my way to look at a HUD house, I passed a corner house, with bay windows, 2 1/2 large bedrooms, one bath with walk-in shower and the most beautiful fireplace that I had ever seen.

The realtor turned out to be someone who really wanted to work with me, and knowing how much I liked the house, assisted me to qualify for a home loan that was a variable at 13.5%. Since then I have refinanced--fixed rate at 9.5%.

I am single, and a legal secretary for a Fortune 500 company. Owning my own property has given me more confidence that with determination, a little sacrifice, there is no goal unreachable without a try.

BRYENDA HALL

Los Angeles

Cleaning and Painting Worth Lower Price

After 10 months’ frustration of looking at what seemed to be modified closets for $100,000 plus, I purchased my first home in July, 1984. I started out looking for a two-bedroom home with a dining room and kitchen eating area. I wanted adequate closets and decent-sized rooms. I looked in Arcadia, Sierra Madre, Temple City and Monrovia. Nothing I saw came close to my hopes for a house.

After five or six months, I started considering condominiums. At least their prices were lower, and most were in good condition. Finally, in May, I was shown the condo I purchased. It was 5 years old, so in good structural shape. The condo needed painting and cleaning; the yard was a mass of weeds. Consequently, I was able to buy it for under the asking price and to assume the mortgage.

I had enough money saved to avoid the expense of a second mortgage, and my payments are not a burden. $100 worth of paint and supplies and physical labor cleaned up all of the neglect. I continue to be delighted with my home, because it meets my needs and desires.

Patience (sometimes rough to maintain), a willingness to modify my dreams, good advice from my parents and time to clean and paint allowed me to become a homeowner.

ELAINE DREW

Monrovia

Borrowed From Folks for Down Payment

After renting for three years we bought our first home in 1975-76 for $40,000. We were able to borrow the down payment of $8,000 from my parents. We developed our small downstairs storage area into a rental to help with the payments.

After two years we sold this home, bought another for $25,000 more and were able at this time, because of increased equity, to pay back my parents’ loan in full.

But even in our new house we rented out a small room and bath. This really helps out on the ladder up.

Now, a few trade-up/fix-up houses and homes later, we own our home in a great neighborhood and four other houses in nearby neighborhoods as rental property, which we plan to retire on.

PATTY SMITH

Arcadia

Bought Townhouse as Their First Home

When we bought our first home, we had saved a bit over $15,000 as a down, but couldn’t afford a single-family house, so we bought a townhouse.

This is an excellent way to own your first home. Yet you have to remind people that even though there isn’t that added payment for home insurance, there is the association fee. Ours has risen about $20 since we moved in three years ago, which isn’t too bad.

Even though we now have about $55,000 in equity, we’re having a hard time finding a single-family home. It’s almost as bad as being first-time buyers! With a 2-year-old baby, a dog and cat, we’ve outgrown our home. Looks as if we’ll be here for awhile, though.

Houses have become out of our reach! We haven’t wanted another condo/townhouse, because most don’t have a real yard, such as this one. We’ve sort of given up for awhile.

W. HOFFMANN

San Dimas

Lived on Wife’s Pay to Save His for House

When my wife and I were first married, we lived in her family’s apartment building. We rented there for two years. My wife is a court reporter and I am a police officer. We put ourselves on a very strict budget.

We bought only those things that we really needed. We deposited my entire check in the bank and lived off my wife’s income. We did this for two years, after which we had $25,000 in our savings.

The search was on. We looked for several months. We then bought a nice starter home with a $20,000 down payment. After five years we took the equity out and bought a home for twice the price of our first home.

MIKE MONTGOMERY

Cerritos