Low on Cash, She Found a Good Place to Start

Looking back, Valerie Lunden can't remember why she sat down with a calculator and added up how many dollars had passed from her bank account to her landlord's in the previous five years.

It might have been the accumulation of 20 years of renting or perhaps it was yet another hassle to get a minor repair at her one-bedroom Studio City apartment.

But she recalls how she reacted to the five-year tally of more than $35,000: "I literally experienced a shortness of breath." Lunden, 39, who works in marketing for United Way in Los Angeles, said the idea of someone else getting tax breaks and earning property equity as a result of her dollars was "nauseating." Not daring to total the 20-year cost of renting, Lunden immediately set her resolve to become a homeowner, even as she acknowledged the drawbacks that would bring.

"Can you imagine I actually wanted to have a mortgage payment, pay homeowner's association dues and property taxes?" she said, in addition to paying for property upkeep. Still, the idea of owning a property and enjoying the tax benefits outweighed her reservations.

Less than a year later, she walked through the front door of her own condominium--a two-bedroom, two-bathroom HUD repossession in Westchester that she has polished into an immaculate, tranquil haven for herself, two parakeets and a neighbor's cat, who comes by often to visit.

At the beginning of her quest, Lunden, a native of India educated in England, pictured herself owning a small house with a yard, either in the Valley or on the Westside near friends.

Trouble was, as several real estate agents she contacted pointed out, her modest income made her a "poor prospect." Plus, she didn't have the 10% cash for a down payment required to purchase a property.

"Or at least that's what I thought," she said. "I knew nothing before I started."

Left without illusions, Lunden used the Internet to search out home-buying opportunities for someone in her financial condition. Indeed, it was the Internet that finally led to her home.

On the city of Los Angeles' Web site, she found a program offering newly built homes, complete with yards, for low-income people.

"I was ecstatic," she said, and played phone tag for two days before learning she made too much money for the program.

"How could this be?" she asked herself. "I had been led to believe I was as poor as a church mouse."

She reached what she considered the pivotal moment in her search when a compassionate city employee recommended she find a mortgage lender that specializes in financing programs for low-income home buyers. Lunden was also told that she should become preapproved for a loan before searching for a property.

"You should get preapproved for any program," said Mary Neal Swift, the lender Lunden found on the city's Web site, noting that having approval allows a buyer to move fast when the right property is located.

Nervous to meet with Swift, Lunden made the appointment anyway and filled out the necessary financial disclosure papers.

"She was scared," said Swift, who put Lunden at ease with anecdotes from her own home-buying and home-owning experience. She told Lunden what she tells many clients: "You're going to be scared. You're going to be on an emotional roller coaster."

Swift gives clients her home number and tells them to call anytime. "I'm your therapist for the next 60 days."

Even Swift's encouragement didn't soften Lunden's disappointment with the amount she was approved for: "a measly $125,000."

Still, Lunden decided to focus on finding a property that was within her price range, close to her job, located in an area where it would appreciate in value and where she would be willing to live for five years. Plus, after living in one-bedroom apartments for so many years, she wanted more space.

Expanding her Internet search, Lunden found the HUD site (, and listings of thousands of distressed or foreclosed-upon properties for sale.

Searching by ZIP Code in Los Angeles neighborhoods she favored, Lunden found three properties of interest. One, a condo, was listed at slightly more than her approved amount.

Taking to heart Swift's admonition not to overbuy, she watched the listing for weeks. When the condo was reduced to $110,000, Lunden rushed out to take a look at the building, a 50-year-old renovated apartment complex, with security gates and secured parking, on a quiet, tree-lined street.

"I felt immediately comfortable about the idea of living here," she said.

It took a week to find a HUD-approved real estate agent and see inside the unit. The condo--converted from an apartment in the 1980s--needed carpet and paint, but Lunden was sold on the tile floors in the kitchen and bathrooms and the sharp white cabinets with wood trim. Although it was in a neighborhood she had considered "questionable," Lunden said she felt secure when she spotted a police station nearby.

For the purchase, Swift recommended Lunden use an FHA-CHFA (California Housing Finance Authority) loan with a "2-1 buydown," which meant the 6.75% interest rate would be reduced to 4.75% for the first year of the loan, raised to 5.75% for the second year and then remain at 6.75% for the remainder of the loan. All told, Lunden's cash contribution was about $4,000 for closing costs.

Lunden became a homeowner early last year for the first time. Since then, she has met all her neighbors, and a friend has purchased a condo in the complex. By now, Lunden's struggles to reach her goal are fading into memory.

"Just a few clicks of a mouse and a few taps on the keyboard of my computer," she said, "and my dreams of homeownership came true."


At a Glance

Home bought: Condominium

Size: Two bedrooms, two bathrooms

City: Westchester

County: Los Angeles

Sales method: HUD repossession

Asking price: $110,000

Loan program: FHA-CHFA

Monthly mortgage payment:

1st year: $749

2nd year: $803

3rd year: $860

Homeowner's association dues: $164 (monthly)

Home search duration: Six months

Mortgage lender: Mary Neal Swift, Pacific Republic Mortgage, Van Nuys, (818) 787-7720


Kathy Price-Robinson is a freelance real estate writer. She can be reached at