Smart Moves by Ellen James Martin


Joyce Bytof, a long-time real estate broker, has 23 grandchildren age 25 to 34. As a strong advocate for homeownership, she's on a mission to persuade all of them to buy a place of their own.

"So far I've convinced eight to buy -- which means I have 15 left to go," says Bytof, who owns a major Coldwell Banker real estate business in Wisconsin.

Despite her professional guidance on real estate, she says her grandkids are still nervous about buying and fear the impact of economic uncertainty.

"They're scared the economy will take a tumble and they'll become house poor. Once they get a mortgage, they worry they won't have enough pennies to go out and have fun or to have a family," Bytof says.

She reports that all eight of the grandchildren who've bought houses so far are pleased they made the move. One reason is that they avoided overextending themselves and taking on an uncomfortably large mortgage.

She tells of one granddaughter who recently bought a first home with her husband. Still in their mid 20s, the couple deliberately chose a place below their means to give them financial leeway.

For a mortgage payment only slightly higher than what they paid each month for the modest duplex they were renting, they bought a three-bedroom bungalow with a one-car garage and a sizeable yard.

Bytof says a sensible, well-planned approach to homeownership helps calm the anxieties of many novices. Here are a few common fears and how to surmount them:

-- Fear of revealing your credit history to a mortgage lender.

Sid Davis, a real estate broker and author of "A Survival Guide to Buying a Home," says many wannabe homeowners worry how their credit histories will be viewed by mortgage lenders. But he says such concerns are usually baseless -- even during the present period when lending standards are stringent.

"In my experience, 90 percent of these fears are simply fears of the unknown," he says.

Mortgage pre-approval -- which lets buyers assess their borrowing capability before they head out to shop for a property -- is now easily obtained over the phone. Even so, Bytof says some first-timers prefer to go to the lender's office for pre-approval.

"If it makes you more comfortable, go see the lender in person and ask your agent to go with you," she says.

Also, to ensure they're being quoted a competitive rate for their mortgage, she encourages all buyers to shop lenders before submitting a formal loan application.

"Credit unions can be excellent sources of mortgage money and sometimes run specials, as do small and large banks," Bytof says.

-- Fear of negative judgments on your home choice from family members.

Most first-time homebuyers are in their 20s or 30s. On financial matters, many still look to parents for guidance. But sometimes the intervention of elders can backfire.

"We've had parents blow up deals for young buyers," Bytof says.

If you're afraid to go forward without your parents' help, she suggests you bring them along on your house-hunting trips. That way they can compare various alternatives and will likely give you more objective advice.

But Bytof cautions young buyers against giving parents a veto over their final property selection -- even if they're helping fund the down payment.

"Assuming they've done their homework and had the property fully inspected, more young people should tell their parents to stay out of the final decision-making process," she says.

-- Fear of making a major error.

Because they realize that the home-buying decision is a major one, Davis says many wannabe homebuyers become risk averse, worrying they'll select the wrong property. And such fears are understandable in the aftermath of the housing crisis. That's because by now, almost everyone knows someone who overpaid for a property and then lost it through foreclosure.

"New buyers often feel they're walking through a swamp of unknowns. But a lot of their anxieties are needless," Davis says.

He believes the best remedy for home-selection stress is solid information. Work with a real estate agent who can accurately advise on the true market value of any property you're considering, thereby reducing your chances of overpaying.

"It's a good thing for young buyers to get a lot of hand-holding from a reputable agent -- ideally one who enjoys helping first-timers," Davis says.

-- Fear of lacking sufficient cash to go through with a home purchase.

Of course, it can be costly to make a housing change at any stage of your life. But Davis says many long-time renters overestimate how much cash they need to become owners.

Granted, no-down-payment mortgages are harder to obtain than before the downturn. But as he notes, buyers can still get into a first property for little or no down through programs offered by the Veterans Administration ( or the Federal Housing Administration ( and Also, many state and local governments still fund first-time buyer assistance programs.

"The key here is to find a sharp mortgage lender who's aware of all the options open to you," Davis says.

(To contact Ellen James Martin, email her at