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Housing market: Opportunity of a lifetime
Buying a home while making $10 an hour working part-time
Dana Fernandez is shown with the keys to her own home. - photo by HIME ROMERO
Dana Fernandez is going from renting a room to owning her own place.

The 25-year-old had to watch every dime for awhile and made macaroni and cheese plus Top Ramen a staple but she was able to do something that was completely impossible in the hot Northern San Joaquin Valley housing market of just a few years ago – she was able to buy her own home without help from anyone while working part-time for just under $10 an hour.

Her home is a one-bedroom, one-bathroom condo with 700 square feet in Modesto that she was able to secure an FHA loan for that required 3 percent. The minimum down payment has since jumped to 3.5 percent. Her monthly payment for the $55,000 condo is $582 and that includes the $250 homeowner’s association fee, insurance, and taxes. The actual jump in housing costs – she was paying $400 for a room in a house – will end up being almost indiscernible. Owning a home gives Fernandez tax deductions she didn’t have before. She also will qualify for part of the $8,000 federal tax credit for first-time buyers. To get the full amount, the home has to be worth $100,000 or more.

It cost her $2,095 upfront including the down payment and closing costs. The Modesto Junior College student did that while also coming up with money to pay several thousand dollars in taxes she owed.

Her real estate agent Linda Aksland emphasized that no one helped the goal-orientated Fernandez come up with the money – not her parents, relatives or friends.

“I figured out what were my wants and what were my needs,” Fernandez said of giving up eating out and trimming her grocery bill to the bare minimum so she could save well over $4,000 to pay both her taxes as well as the upfront money for a home of her own. “You really have to minimize your wants.”

Fernandez said she had always made owning her own home and property a goal. Fernandez said she realized that the current market was a “chance of a lifetime.”

It helped, of course, that she was able to see the day-to-day real estate activity in Manteca where she works part-time for Aksland and is in the process of becoming a full-time agent.

“I realized I could afford it if I watched my money,” she added.

Part of the process was making a list of needs, versus wants and even rethinking wants in a house. She quickly discovered needs such as granite counter tops were really a want after taking a look at prices and options of various properties.

“This isn’t my dream house but it gets me started,” Fernandez said. “It’s got most of my needs and I can always get granite counter tops when I can afford them.”

Fernandez also realized that she had to focus her search for a decent home in a price range in the more affordable areas of the region. In her case, she happened to already live in Modesto. More and more Realtors in Manteca-Ripon are directing buyers who may make between $15,000 and $35,000 a year and need a home or condo that will go FHA and can’t qualify for down payment assistance programs either because their income isn’t low enough or there is too big of a backlog to look in areas such as Oakdale, Riverbank, Escalon, Modesto and Stockton where there is a healthy inventory of under $100,000 homes.

Patience is also important. Fernandez made five offers.  She would get close to start closing a deal only to find out that the seller’s agent didn’t realize the condo wouldn’t go as an FHA loan. Buyers going for homes under $150,000 more often than not find themselves in multi-bid situations. Often times, they don’t get a home until they make offers on 10 or more homes.

Fernandez said she didn’t let what seems to be non-stop 24-hour cable news cycle of economic gloom-and doom scare her.

“Life is a risk.” Fernandez said, noting that even in good economic times things could go wrong. “If something does happen the worst that I could end up doing is going back to renting.”

Fernandez, though, was careful to borrow less than she qualified for on her mortgage loan. It is a trend that agents throughout the Northern San Joaquin Valley noted is becoming more and more common. If buyers qualify for a $150,000 loan, they tend to not want to go much past $125,000. It is the opposite of three years ago when buyers pushed the limit of the loans they were eligible to obtain.

At one point during her five-month odyssey to find a condo that would meet her basic needs that was solid and affordable, Fernandez said she got frustrated and at one point decided she was not going to look any more.

She changed her mind after reflecting that the market today is a once-in-lifetime opportunity given that someone even working part-time with a job paying around $10 an hour can actually buy their own home.