By: Katie Bedard
June 21, 2010
NORTHERN MICHIGAN - Many feel that in today's economy the dream of buying a home is unattainable. It's not.
For the Kotarski family, their dream came true on Dec. 23, a gift that came just in time for Christmas. It took nearly four years.
Jennifer and Robert Kotarski moved to northern Michigan in July 2006 and stayed with family, planning to save up and buy a home, a place to raise their four children. What they got was much different than they could have ever imagined.
The Kotarskis were approved for a mortgage through USDA Rural Development's Section 502 Direct Loan program, a program funded directly by the federal government that allows applicants at or below 80 percent of the area's median income to purchase a home, often with subsidy assistance to ensure repayment.
And if that program weren't enough, Jennifer Kotarski was in for a surprise. The Rural Development loans required her to take homeownership classes, so she called Northwest Michigan Community Action Agency (NMCAA) to sign up for the sessions the organization offers and was told about yet another program to assist her family in buying a home: the Individual Development Account (IDA).
This program, called Michigan Saves, is a matched savings program "that helps customers save for a down payment, closing costs or principal reduction over a set period of time while improving credit, attending budget counseling and financial fitness education," said Karen Emerson, manager of the Financial Management Services programs at NMCAA. "The accounts can be used towards homeownership, post-secondary education and start-up or expansion of business."
After saving a regular monthly amount for two years and attending the required counseling sessions and classes, the Kotarskis account balance was matched with program funds for a down payment.
During this time, the family was also introduced to yet another housing organization in the area: HomeStretch, is a nonprofit regional developer of affordable housing serving the counties of Antrim, Benzie, Grand Traverse, Kalkaska, and Leelanau.
The organization has participated in building or rehabilitating affordable housing in both homeownership and rental situations, including purchasing four lots to build brand-new homes in Traditions, a neighborhood-style development just south of Traverse City where the Kotarskis have made their new home.
"HomeStretch was very helpful and answered all our questions (about buying a home)," Jennifer Kotarski said.
"It took a long time, and everything happened by accident," she said. "I didn't know about these programs. I learned about the IDA program through asking about the homebuyer education classes for the Rural Development loan. The homebuyer education classes brought me to HomeStretch.
"Finding out about the programs was the hardest thing, but if you can wait (through the sometimes long approval processes) it's worth it. Even when it's frustrating, there is help out there and people who want to help you."
Northwest Michigan Community Action Agency has a wide range of resources for people looking to purchase a home.
"NMCAA has provided homeownership education since 2001," Emerson said. "This year NMCAA was awarded the Michigan State Housing Development Authority's (MSHDA) Housing Counseling Agency of the Year award for providing essential and unique services to the communities served.
"The homebuyer education workshop is a two-night segment that includes learning the terms related to homebuying, how to shop for a loan, how to shop for a house, the homebuying process and what to expect. In addition, Financial Fitness Workshops are held monthly that help customers learn how to build wealth and reduce expenses."
Also, Emerson said, NMCAA works to provide a holistic approach for their clients.
"Referrals are made to HomeStretch, a housing developer, the Traverse City Housing Commission for housing rehabilitation loans, as well as Habitat for Humanity. Through the homeownership classes, one learns everything from A to Z about becoming a homeowner and being an educated consumer," she stated.
With so many useful programs available, Emerson said 2010 is one of the best times to buy a home. And with June representing National Homeownership month, this summer is even better.
Not to mention, of course, the market.
"Right now is an excellent time to buy," said Lesley Werth, associate broker with 45th Parallel Realty Premier. "Home prices are extremely low, and most importantly, interest rates are historically low."
However, because of all the great deals out there, purchasing a home right now can take quite a bit of legwork, according to Werth.
Striking a balance
"It is important for homebuyers to have patience and perseverance when shopping for a home," Werth said. "Meeting with a lender to know your price range is the first thing. Then, (because of the competitive prices some of these homes are listed at), the homebuyer needs to be able to act quickly to make an offer when they find the home they love."
Many people think that because the $8,000 homebuyer tax credit has expired, there are no incentives to purchase a home right now, but with the combination of low list prices, low interest rates and a variety of assistance programs, it truly is a buyer's market in this region, Werth said. Sellers need to be very aggressive with their list prices to compete with other homes, especially foreclosures, in the area.
Additionally, there are several loan options that do not require large down payments, said Mary Clark, branch manager of John Adams Mortgage Company.
"Rural Development is coming back with funding; they hope to have it by the end of the month," she said. That is a zero-down program that allows the seller to contribute to the buyers' closing costs.
"Additionally, MSHDA has another low down payment program, which only requires one-percent down-payment available. Both have fixed low-interest loans. The regular FHA (Federal Housing Administration) requires 3.5 percent of the purchase price as a down payment, and the Veteran's Administration loan is a zero-percent down-payment program for veterans."
Clark said the current cost of housing is a key element to consider when weighing your options.
"Low interest rates combined with low home prices make it cheaper to buy than rent."
There is no denying that purchasing a home is a serious undertaking, Emerson said. "The upkeep of a home from roof to basement is a lifetime commitment, but real estate is a good investment because of the equity that develops."
Werth echoed those thoughts.
"For most people, purchasing a home is the biggest, scariest and most exciting investment they are going to make," she said. "Everyone needs to be sure to have the proper advice and guidance."