Christine Savella is no stranger to challenges. The single parent of an autistic son, she is used to juggling school and work, as well as organizing her son’s frequent therapy sessions.
The 28-year-old elementary school teacher, who has lived with her parents in Echo Park since the birth of her son Nicholas, 4, now has decided to take on a new challenge: buying her own home.
But with no down payment and only a moderate monthly income, Savella fears that her dream of homeownership will remain just that--a dream.
“The thought that half of my monthly net income will go toward a mortgage is scary,” Savella said. “But I want to have my own home so that I can arrange to have Nicholas’ therapy in my house, without having to involve my parents anymore.”
To find out what her priorities are, Barbara Pajor, a home loan expert at Washington Mutual in Torrance, asked Savella what she thought she could afford and what she most needed in a home.
With a gross monthly income of about $2,800, a portion of which is allocated for Nicholas’ therapy and medication, Savella thought she could afford a small house or condo with two bedrooms. She wants to keep the monthly mortgage under $900, which is $600 more a month than she currently pays in rent to her parents.
The educator said she wants to live in Highland Park because it’s near her son’s school. She wants the home to be spacious enough to set up Nicholas’ occupational therapy, so he no longer has to go to clinics for treatment.
“I’m worried about making too many changes with my son,” Savella said. “If I can stay close to my parents’ house, we won’t have to find a whole new set of therapists.”
To begin the qualifying process, Pajor ran a credit check, which revealed that Savella has paid her bills on time, and her student loans--totaling about $13,000--would not be an impediment to getting a loan.
As a first-time buyer, Savella qualified for a 97% loan on a $100,000 home. The 3% down payment, for which she is responsible, does not have to come from “seasoned” money--that is, funds from an established account. Pajor recommended that instead Savella try to obtain the down payment from a family gift or borrow it on her credit card.
Because Savella has little cash saved, Pajor recommended that, as part of the purchase deal, the seller pick up the closing costs of about $3,222, a common practice among first-time buyers.
In most such transactions, the seller adds the amount of the closing costs onto the purchase price. The potential hitch, however, is that the new, higher price may exceed the appraised value of the home.
Pajor recommended that Savella concentrate on buying a condominium, rather than a single-family home, both because it’s more feasible in today’s high-priced market and because it will free her of many of the home maintenance chores that would take time away from tending her son.
“Christine has to start somewhere, and although it would be great to get a house, I think a condo is perfect for her,” Pajor said. “She’s establishing homeownership, which is quite an accomplishment. She’ll build up equity and trade up later.”
Pajor also recommended that Savella enroll in a home buyers’ workshop to receive counseling about her responsibilities as an owner and learn about the purchasing process.
Savella already has enrolled in such a class, where she learned about Fannie Mae’s HomeChoice program. HomeChoice provides down payments and other assistance to people with such disabilities as cerebral palsy, autism and mental retardation or to their families, if their care is administered at home.
Savella said that although the prospect of tripling her monthly housing nut to about $975 is daunting, she feels that amount is within reach and worth the stretch.
With a $100,000 condo, Savella’s monthly outlay would include $654 for the mortgage, $104 for property taxes, $20 for homeowners’ insurance and about $125 in condominium association fees.
Because Savella’s down payment is less than 20%, she also is required to pay mortgage insurance, which protects the lender against a possible foreclosure. That additional payment of $72.75 brings the monthly total to $975.
“I’ve already adjusted my budget and got my credit card debt down,” Savella said. “This is a great goal, and I want to do it.”
First, however, Savella has to see what’s available in her price range, and her choices are going to be tough, said Eric Toro, an agent with Uptown Properties in Highland Park.
Keeping in mind Savella’s financial limitations and her desire to not disrupt Nicholas’ life, Toro confined his initial search to Highland Park, where he found only two condos listed; there were no single-family residences available in her price range.
“This is a tough, tough market,” Toro said. “There are very few things available. I’d jump into one of the Highland Park condos. Soon.”
The most desirable condo, and the one that most closely fits Savella’s needs, occupies 753 square feet, with two bedrooms and two baths, Toro said. It’s listed at $95,000 and includes a laundry room in the unit, a garage and a pool.
Although it’s small, Toro said it beats a similarly priced one-bedroom home listed in Glassel Park, with 594 square feet, about the size of a two-car garage.
After widening his search, the veteran real estate agent still found only two acceptable listings in her price range, in an area encompassing Eagle Rock, Mount Washington, El Sereno, Cypress Park and Montecito Heights.
Toro explained that as many buyers have been priced out of the Westside housing market, they have switched their focus eastward, driving up home prices in areas such as Silver Lake and Echo Park.
“It’s getting as tough to buy over here as it is in Santa Monica,” Toro said.
To illustrate his point, Toro said that it took eight months to find a home for a client in the $150,000 range, adding that first-time buyers must be patient and persistent. .
Driven by her desire for independence, Savella said she is more than ready to begin her search.
“I need to be on my own now, to grow up,” Savella said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
This Month’s Make-Over
Home buyer: Christine Savella, 28.
Occupation: Elementary school teacher.
Gross monthly income: $2,800.
Goal: To buy a two-or three-bedroom single-family residence or condo. The problem: Savella is a single parent, supporting her disabled son. She has no down payment and is worried about making mortgage payments.
* Buy now; don’t wait.
* Get a 97% loan on a $100,000 home.
* Use a family gift or credit card for $3,000 down payment.
* Ask sellers to carry closing costs.
* Grab the Highland Park condo. In today’s market, if you snooze, you lose.
Meet the experts:
Barbara Pajor is a senior loan consultant for Washington Mutual Bank in Torrance and has handled home loans for 18 years.
Eric Toro is an agent at Uptown Properties in Highland Park and has sold real estate for 12 years. He is a member of the Glendale Assn. of Realtors.