Homebuying advice for the young and wary
Twenty-three-year-old Chrysta Lyle was too young to get in on the charmed housing market of five or 10 years ago. Back then, everything a Washoe County homebuyer touched turned to gold, or at least, equity. Home values were appreciating $10,000 a month in some areas. Even if you had no money, it seemed you couldn’t go wrong. Buy a house, and money would fall from the sky.
Then, about 18 months ago, the bubble burst. The nation was raining foreclosures—with Nevada leading the pack with one filing for every 75 households—3.5 times the national average.
But by then, Lyle and her boyfriend, Will Knight, were ready to buy. While the rest of the country bemoaned the “housing bust,” Lyle and Knight found they were smack dab in the middle of a buyer’s market.
“It’s never been a better [buyer’s] market than now, and I’ve been doing this for 30 years,” says Jerry Morrissey, a realtor with RE/MAX Realty.
Morrissey says 30 percent—up from a more typical 2-3 percent—of the homes for sale in Reno/Sparks are vacant. Vacant. That means many sellers are making two house payments and are desperate to sell. They may be willing to cover closing costs, buy down the interest rate or even front the down payment.
“There’s almost nothing right now that’s off limits as long as a lender approves it,” says Morrissey.
Give yourself some credit
Lyle and Knight now live in a two-story home at the end of a cul-de-sac in Cold Springs. The 1,600 sq. ft. house was built in 2001 and closed escrow in March. It holds three bedrooms, 2.5 bathrooms, a two-car garage, hardwood floors, a big backyard with plenty of room for gardening and their two dogs, as well as the RV they inherited from Lyle’s parents. They got it for $255,000, no-money down, with a 5.9 percent fixed interest rate, and the seller paid their closing costs. Total monthly payment—including property taxes, insurance, homeowners association fees: $1,781.88.
Such a house for such a price is extremely rare in Reno/Sparks, where a $250,000 house—if you can find it—will most likely be a fixer upper with little to no yard. North Valleys is one area that gives more house for your money, provided you’re willing to make the 20-30 minute commute, more frequently gas up the car and relax about the whole carbon footprint thing. The location worked for Lyle and Knight because Lyle’s truck-driving job with U.S. Foods is based in nearby Lemmon Valley. Social life is no problem, they say, as many of their friends had already bought homes in the area.
Nevertheless, homebuyers region-wide are finding decreasing prices and highly motivated sellers. “A lot of people are getting really good deals because the market is thrashed,” says Knight, 28, his dark hair slightly wet from a recent shower.
“It was less scary than I thought it would be,” says Lyle, an endoscopic technician at Renown Medical Center, her brown hair and black-rimmed glasses framing an earnest face. “But there was a lot of paperwork.”
The bulk of the paperwork came from applying for a loan from the Nevada Rural Housing Authority, which required years’ worth of pay stubs, among other things. Without that loan, buying the home would’ve been much more difficult. The couple says they wouldn’t have known about the rural housing loan if they hadn’t met with a reputable loan officer—in their case, Michelle Alarcon of CTX Mortgage.
After first meeting with a realtor for an “information interview” about what they wanted out of a house, they met with Alarcon to discuss their goals and options.
Rule No. 1 of buying a house: Get credit.
Rule No. 2: Make sure that credit is good.
“The killer to buying a house is bad credit,” says realtor Morrissey.
Knight had violated the first rule; he had no credit. Lyle had violated the second by making late payments on a few too many shopping sprees, courtesy of her credit card.
So step one was establishing credit. They got a credit card with a $300 limit, bought little things and paid them off on time. After about six months, they were preapproved for a loan on a $265,000 house. They wanted to make sure they could meet the payments, so they opted for a slightly less expensive home.
“When the market was going crazy, a lot of people got stuff they couldn’t handle,” says Knight. “You definitely want to make sure you can pay your payment.”
Another word of advice from the house of Lyle and Knight, who’ve been together for four years and are intent on staying that way: “Make sure you want to be together before you buy,” says Lyle. “When you buy a house, it’s not as easy to get rid of it. If we sold now, we’d get taxed and probably not sell it for what it’s worth.”