Achieve Your Dream Of Homeownership: You Could Win $10,000

Even if you don't win the cash,you'll come out on top. But don't take our word for it -- three entrants from our first contesttell how homeownership pays off.

the benefits of homeownership are undeniable, challenges to finding affordable homes abound in many real estate markets around the country. Real estate prices have appreciated dramatically in recent years, averaging $223,000 in April 2006. Interest rates are on the rise: The average mortgage rate is projected to reach 6.9% during the second half of 2006, according to the National Realtors Association. Add those numbers to the difficulties of improving a credit rating and finding down payment and closing cost assistance, and it’s clear that buying a home has become more difficult, but it’s still an attainable goal.

OVERCOMING THE DEBT BARRIER
Donovan Martin and his wife Rena Rios-Martin entered last year’s Own Your First Home Contest on July 22, 2005 — the day after BE began accepting entries. The three-bedroom Bronx, New York, apartment they had rented since the spring of 2002 was too cramped for their growing family. The couple had three young children, so they decided it was time to look into homeownership.

Donovan’s credit score was a less-than-stellar 600, while Rena’s was a respectable 650, but neither could qualify for a loan in the New York market on their own. Their salaries — Donovan’s $70,000 as a network engineer for AT&T and Rena’s $68,000 as a registered nurse at Montefiore Medical Center — gave them a good combined income, but improving their credit scores would give them the best opportunity to buy a home.

“Before I sa
t down and talked to anyone, I made sure that we cleaned up our credit reports,” Donovan says.

The couple decided to live off of Donovan’s paycheck, and used Rena’s to save the down payment and to pay down the $25,000 credit card debt they had accumulated from 10 credit cards. In October 2003, they consolidated their credit card debt on the advice of a credit counseling company, making $400 monthly payments, but soon realized they could pay their debt off faster by making larger payments directly to each of the credit card companies.

As the Martins eliminated their debt, they also examined their finances to figure out how much house they could afford. They knew their mortgage payments would be far higher than the $800 a month Rena’s uncle was charging them for their apartment. They visited Realtor.com to do mortgage calculations using different down payment amounts.

Searching for a home in early 2005, the couple found a 3,000-square-foot house being built in Meadow Winds, a new development in Newburgh, New York. The four-bedroom house had a purchase price of $425,900, which included about $25,000 in upgrades the Martins added during construction.

With better debt profiles, the Martins received financing from Chase Bank — a 30-year, 6.2% fixed-rate mortgage loan of $361,344 and a $67,000, 7.5% second mortgage. The Martins made a $34,185 down payment using $22,000 taken from Donovan’s 401(k) plan and the rest from their savings.

“I look at this home as a starting point. It’s an investment that will lead to other investments if we use it correctly,” Donovan says. The house was completed in March and the family

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