For many, a wait-and-watch attitude

Editor’s note: Every month we profile potential home buyers who are uncertain about housing affordability, their credit or whether they can buy on limited income with little savings.

Since the Home Buyer Make-Over series started in 2001, we have interviewed more than a dozen potential home buyers, and taken their concerns and issues to mortgage banking and real estate experts throughout Southern California.

Here’s a look at a handful of those we profiled and how they are doing:

Kannyn MacRae

In early 2001, all Mar Vista renter Kannyn MacRae wanted was to buy a house or duplex “west of the 405.” At the time, the only thing available in MacRae’s $300,000-to-$350,000 price range was a 1,000-square-foot, three-bedroom, one-bath house in Redondo Beach.

MacRae, 36, chose to wait, hoping he could afford more later.

“I decided to save money, watch the market and do more research,” said MacRae, a business unit manager with a computer accessories company. Houses in the “$350,000 range were little closets and falling apart.”

In a year and a half, MacRae was able to save an additional $15,000 to $20,000 to help widen his options. “But I was really cutting corners,” he said. Finally, last summer, MacRae closed escrow on a 1,000-square-foot 1924 California Craftsman west of the 405 in Los Angeles for $420,000.

But getting the house wasn’t easy. MacRae lost out in bidding wars on four other homes in Mar Vista and Venice. He managed to make the purchase by beating out 17 initial bids because he had no contingencies and was pre-approved for a loan. “There were 40 couples [at the open house] with measuring tapes,” he said.

A bachelor, MacRae said he worried that he would lose out to a married couple. But because he was able to move quickly to meet the seller’s desired 30-day escrow, he succeeded.

Lisa Marie Griffin

Last January, 37-year-old single mother Lisa Marie Griffin was sleeping on the couch of her Yorba Linda condo. She had given up her spacious master bedroom to a string of roommates to help pay her $1,190 monthly mortgage payment. Tired of rude and demanding roommates, Griffin and her teenage son, Nathan, wanted to go it alone.

“I would rather eat beans first before I had another roommate,” said Griffin at the time.

Refinancing, a tactic that many homeowners have turned to in this year of low interest rates, allowed her to recoup the lost rental income.

Griffin was able in August to bring her old interest rate of 7.5% down to 6.75%, dropping her monthly mortgage to $1,037. The $153 a month in savings is substantial to Griffin, who has worked for 12 years in maintenance at Disneyland and makes $23,000 annually. The monthly savings allowed her to live without a roommate and even to buy new carpet and shutters.

The changes have provided Griffin social opportunities too. “I have my living room back,” she said. “I’m entertaining in the house for the first time.”

Elizabeth Paul

Shortly after the April profile of Elizabeth Paul, who had overcome bankruptcy to buy a home so she could become a foster parent, the 40-year-old Palms Middle School teacher went into escrow on a three-bedroom, two-bath home near Inglewood for $205,000.

But during the home inspection, Paul discovered the house needed major electrical, plumbing and roofing repairs that she was not willing to take on, so she dropped out.

“It was a huge amount of relief,” Paul said. “[The house] was going to be a money pit.”

Soon after, Paul unexpectedly relocated near her hometown in Maryland to be close to her sick father.

“I had a nagging feeling to come home to be with him,” she said. Two months later, her father died of lung cancer.

Paul is hoping to inherit her father’s four-bedroom house in Hagerstown, Md., which sits on nearly one acre. Paul’s father bought the house -- a two-story brick with four-bedrooms and 1 1/2 baths--for $144,000 in 2001.

While housing is much cheaper in Maryland, she said earlier this month, “I miss Los Angeles, especially the weather. It was 10 degrees this morning.”

Paul said her father’s death and taking care of his home, three dogs and his extensive garden will temporarily put her dreams of being a foster parent on hold. “But I still very much hope to be in that type of parent role someday.”

The Trautweins

Paul and Mary Beth Trautwein, featured in June, love the two-bedroom, 800-square-foot Venice bungalow they bought in 1999 for $239,000. But the place has become cramped now that the couple has a 2-year-old daughter and Paul, a graphic designer and Web master, works out of the home. If the Trautweins moved to get more space -- to the San Fernando Valley, for instance, where they could get more for their housing dollar -- they would be leaving the beach neighborhood they love. But staying and remodeling could be costly -- up to $150,000.

Although the Trautweins were pre-approved for a $220,000 loan and could make a nearly $200,000 profit if they sold their bungalow, allowing them to look in the $350,000 to $450,000 price range, they decided to stay put.

“We like Venice ... and our mortgage payments are within our budget,” said Paul, 39. The Trautweins opted for a $25,000 remodel to help free up space in the house, including splitting a bathroom into separate toilet and shower areas. The plan won’t give them more square footage, but it makes use of the space more efficiently. “It should make living here more comfortable,” Paul said.

Angelo and Kathy Bell

Last summer, escrow on a $179,900 Moreno Valley home for Angelo and Kathy Bell came to a halt two weeks into the process when the lender decided to back out because of credit issues.

Not being able to move forward with their dreams of homeownership, the Bells were devastated. They had hoped to host a family holiday gathering this year at their new home.

But, like many denied the first time, the Bells shopped for a loan and were eventually approved for a $115,000 Wells Fargo three-year adjustable rate mortgage with an initial rate of 7.5%. The catch: It required the couple to buy in Los Angeles County and live in the house five years.

But in today’s record-breaking seller’s market, the Bells felt the loan -- combined with a second for $35,000 from the California Housing Authority -- would buy little. “In this market, our loan would have gotten us a shack in the woods,” said Angelo, 37. “We’ve decided to wait a year or two.”

In the meantime, the Bells are saving. They traded their $1,600-a-month Miracle Mile rental for an apartment nearly twice the size in Bellflower for $950 a month. The apartment will give the Bells some of the things they were looking for in a home: a room for each of their daughters, Cimone, 1, and Israel, 3, and a small backyard where they can play.

Kathy, 30, has gone back to work. She’s also enrolled in school to help increase her earning power. Angelo, who makes $61,000 a year as an information technology manager, has stepped up his part-time computer repair business and has developed a credit-repair program, which he is selling on the Internet and through online auction sites.

The couple hopes to build their savings and eventually buy in Cerritos, where the current median price for a home is $375,000, according to Tom Mikalson with ReMax College Park Realty in Los Alamitos.

“Basically, we’re very happy right now and very confident in our decision to wait,” Angelo said.

Pat Cici Jr.

Pat Cici Jr., 32, had done everything right to buy a home: He had saved nearly $20,000 by living at home with his father and stepmother, scrimped and saved on purchases and researched neighborhoods and interest rates almost obsessively.

Getting an approval for a $180,000 loan wouldn’t be hard for Cici with his excellent credit and cash at hand, but finding a home (he was adamantly against a condominium) in that price range would be difficult. While Cici had hoped to buy in the San Gabriel Valley or Whittier, no homes or townhomes were available in those areas in his price range. Properties he had looked at in La Puente, Norwalk and Chino Hills were disappointing.

Cici stayed with it, continuing to research neighborhoods and checking out open houses.

In September, he found a condo that he liked. But getting it was a roller-coaster experience.

Cici first made an offer on a condo in Duarte, only to lose out because another bidder was willing to take on a longer escrow of 90 days.

Then he lost out on a $175,000 two-bedroom, 2 1/2-bath townhome in Whittier because another bidder was able to put down 20% as opposed to his 5%. But three weeks later, Cici’s real estate agent informed him the winning bidder had lost his job and wouldn’t be able to secure the loan.

“Then they offered me the house,” he said, “which I readily accepted.” Cici was able to avoid paying private mortgage insurance, or PMI, a monthly payment that protects the lender from possible default by the borrower, by carrying two loans on the home. (PMI is usually required on loans with less than a minimum of 20% down.)

Cici’s first loan was for 80% of the value of the house, or $140,000 at an interest rate of 5.875%; the second loan was for $26,250 -- 15% of the purchase price of the home -- at an interest rate of 7.875% for 15 years. This type of dual loan program would only require a 5% down payment.

In all, Cici’s monthly mortgage payment will be a comfortable $1,200 a month on his approximately $40,000 annual income as a project manager for a packaging company.

Since the house closed escrow, Cici has been enjoying homeownership and has even been on a shopping spree, spending about $2,500 on appliances and cleaning supplies for his new place -- money he spent out of his nest egg. “That was the whole reason I was saving up money,” he said.

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Allison B. Cohen is a Los Angeles freelance writer.