Overcoming challenges to homeownership
Buying a home is a big commitment, one that takes preparation and can seem daunting. Allison’s story, however, is a testimony that with hard work and commitment and the support from agencies like LSS Financial Counseling, you can take control of your finances and make homeownership a reality. Since June is National Homeownership Month, it’s the perfect time to tell Allison’s story.
Facing Financial Challenges
Allison had several major challenges to overcome before she and Tyler, her partner, were ready to buy their first home. She faced a large student debt balance and had several unpaid bills, including three that were in debt collection. Allison was working three jobs trying to keep up with the payments.
She admitted that her financial struggles “created so much anxiety, stress and shame. I wanted to manage my finances better and not have them bother me anymore. But I felt it was an impossible, uphill climb — that I was never going to pay off my bills, never have any savings and never buy a home.”
She decided to attend one of LSS Financial Counseling’s public presentations. “The speaker was so personal and kind. She said not to feel shame, that everyone gets scared and that their counselors wouldn’t make me feel judged. I decided to take the leap and start taking control of my finances.”
Allison connected with a financial counselor who put her at ease. “Dan [her financial counselor] made my situation feel less scary. He made me feel less ashamed and alone about it, that it was manageable and that I could do this.”
Reducing Debt and Improving Credit Scores
She and Dan reviewed her budget and put together a workable plan. She connected with the collection agencies and was able to pay off those debts “in a couple of months.” He signed her up for a federal program that will forgive a significant portion of her student loans after she makes payments for a total of 120 months. With Dan’s support, she also started an income-based plan that lowered her monthly student loan payment from $300 to $40. This freed up a significant amount of money so she could pay down several outstanding medical bills.
Additionally, Allison took steps on her own to reestablish her credit. “I opened up one charge account to show creditors that I could manage the monthly bill.” Thanks to all these actions, her credit score increased from 628 to 750, a score considered excellent by credit reporting agencies.
Successfully Moving Toward Homeownership
Allison and Tyler then focused their sights on buying their first home. They rented an affordable apartment, which helped keep monthly expenses down. With her debt now manageable, she was able to put money into savings. In five months, Allison set aside enough that, combined with Tyler’s savings, they accumulated $10,000. This turned out to be enough to cover closing costs and the repairs on the home they eventually purchased.
While they built up their savings, they connected again with LSS Financial Counseling. Tyler talked with a financial counselor in the Homebuying Service, and the counselor supported them through the homebuying process. “Tyler and I didn’t think we’d ever be able to afford a house or qualify for a loan,” Allison said. “Our counselor helped us see it was possible and gave us the confidence to save and push forward.”
The counselor gave advice not only on how much money they should save, but also calculated the range of house prices they could afford and estimated preapproval amounts for the home loan. Tyler’s counselor told him about down payment assistance programs and referred them to a class for first-time homebuyers, a requirement to qualify for the down payment assistance. “This class was a huge resource for us,” Allison said. “We not only learned concepts about home ownership, but negotiation skills that helped us make a successful bid on a house.”
Creating a Strong Foundation for the Future
Today, the couple is enjoying their home in north Minneapolis on a street with a beautiful row of trees. Challenges remain, such as Allison’s ongoing medical expenses for a chronic illness. However, all her past medical bills are paid; there are substantial funds in their savings accounts; and they have the tools, skills and confidence to maintain control of their finances and afford their ongoing housing costs.
Much of Allison’s and Tyler’s success is due to their hard work and persistence; Allison also recognizes the role that LSS Financial Counseling played in achieving their goal of homeownership and paying down debt. “I am such a fan of LSS Financial Counseling, and I tell everyone who’s interested to talk with one of the counselors. I hope my story can inspire someone to take that leap, change their financial lives and realize dreams like owning a home.”
LSS Financial Counseling’s Homebuying Service is available to anyone in the state of Minnesota. Call 888.577.2227 to set an appointment with one of our experienced housing counselors. Our services for debt management, credit reviews, student loan counseling and budgeting are available across the U.S. For these services, call us at the number above or get all your support online. All appointments are free and confidential.
Author Sandi Kleist is LSS Financial Counseling’s Director of Homeownership Services.