Born again — into a new home

Sandy families are now able to take advantage of USDA guaranteed home loans

By Jim Hart

The Sandy Post, Apr 14, 2009, Updated Oct 30, 2009

Only a month ago, neither Shane nor Tammy Lawrence thought they would be using their key to open their front door and walking into their own home.

But that’s what they are doing today when escrow closes on their Sandy home.

For the past six years they have been moving from one apartment to another or to a rented duplex.

“With only one income,” Tammy said, “we didn’t even think (a home) was a possibility.”

With little savings for a down payment and only one major income source, the Lawrences felt trapped in the rent cycle.

“When the rent would go up, we’d look for something cheaper,” Shane said.

The light goes on

Then Shane acted on what he called a “whim” and called John L. Scott — the company he bought his first home through years ago.

Very quickly real estate broker Alea Keating showed the Lawrences how they could sign their names to a document and end up nearly $30,000 ahead.

Keating put them in touch with mortgage consultant John L. Mayer of Mortgage Express in Sandy, and soon the Lawrences discovered how they could buy a nice home they could afford with no money down, no closing costs and at a selling price $15,000 under its appraisal.

This all happened so quickly (less than a month) because of the USDA guaranteed loan program that Keating and Mayer explained to the Lawrences.

The loan comes from an area bank and is backed by the federal government. That makes it a desirable loan for banks and speeds the approval process.

The loans are for up to 102 percent of the appraisal value, which in today’s market is often higher than the selling price.

There’s also an $8,000 federal tax credit for first-time home buyers, and many sellers are paying all closing costs.

The Lawrences bought the $215,000 home for about $200,000, and they didn’t have to pay about $7,500 in closing costs. They also qualified for the $8,000 federal incentive.

Closing the deal has made a huge difference in the way the Lawrences look at their future.

“This is our home,” he said, “and we can have more pride keeping the yard looking good and having a garden without asking (a landlord) permission.”

And along comes another

The Lawrence family is not an exception. Take, for example, Stacy and Adam Cook, who have rented all their lives – and Adam is 31.

When Stacy and Adam were renting with their first baby several years ago, they could afford only a bedroom.

Eventually, they graduated to renting an apartment and later a home. But renting a home is miles away from owning a home.

The Cooks will admit there are rivers to cross before anyone can own a home.

At least they thought so.

They thought they had to have a substantial down payment, but their savings were growing very slowly. And they thought they had to have two incomes, but only Adam was fully employed. And for Stacy’s income as a child care provider to count, she had to have two years of tax returns to prove consistent income.

The Cooks came up short on several fronts.

“We weren’t going to buy a home if we didn’t know if we could afford it,” Adam said. “We didn’t want to end up in a situation like some of these other people got themselves into.”

But their John L. Scott real estate broker, Toby Elliott, came along and saved the day.

Elliott introduced the Cooks to the USDA guaranteed loan program in February.

“Having the no-down loan really helped us,” Stacy said.

And last month, the Cooks were doing like the Lawrences did today – walking into their new home.

With no money down, they bought a nice, nearly $229,000 (appraisal) home for about $215,000 and didn’t have to pay closing costs of more than $7,500. They also are looking forward to the $8,000 federal “gift” they’ll get next year.

“You can’t beat that type of deal,” Adam said.

“Now that I own a home,” Stacy said, “I am going through a transition. I feel almost born again. I feel more responsible.”

And another

The Cooks also aren’t exceptions. Real estate broker Connie Knittel of Pacific Pioneer Real Estate in Sandy cited an example from her repertoire of recent buyers: a young, single man who last year qualified for only a $150,000 loan.

But the market changed, and Knittel found him a $169,000 home that he was able to get into for $147,500. The seller paid $6,000 of the closing costs on his USDA guaranteed loan.

The man was all smiles when he found out that the loan payment was only about $850 a month – easily affordable.

Now is the time

Elliott said USDA loans are available only in rural areas, and Sandy is considered rural. The USDA map shows the west boundary line drawn at approximately 302nd Avenue north of Highway 26 and just west of Damascus on the south side of Highway 212.

Elliott believes the market has hit bottom in the Sandy area and could be starting a rebound, making this a good time to buy.

“This is definitely a buyer’s market,” he said.

For more information, call Mayer at 503-720-4814, Keating or Elliott at 503-826-9000 or Knittel at 503-668-4994, or http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.