For years, mortgage banker Linda Kosich has been counseling first-time home buyers on how to budget and save.
Her goal has always been not just helping them get into a house, but "preparing them to keep the home they purchase," she said.
Now, with mortgages much harder to qualify for in the wake of the subprime lending crisis, it's even more important that potential home owners learn how to cut down on expenses, stop living off credit cards and adjust their expectations, Kosich believes.
So she's starting a free class — "a sort of home-buying university," Kosich calls it — to do just that.
Branch manager of AmericaHomeKey Inc., Kosich is the teacher, and she's being assisted by several real estate agents who will serve as coaches. The debut class, with seven participants, meets Tuesday, Oct. 21.
Financial counseling like this is such a critical need in the current economic and housing environment, where more and more home owners can't pay their mortgages and face foreclosure, she said.
A fundamental lifestyle change is what's needed, Kosich said.
"People are ill-prepared" to handle any kind of financial stress because "they're so used to managing on credit," she said. "There's too much moment-to-moment living."
Kosich is hoping to recruit more participants so she can have multiple classes running simultaneously, each with about six to eight people. The small groups will meet once a month and "graduate" after eight months or so.
Kosich is the sole instructor, though each class group will be assigned a coach to help them along the way. The coach for the initial group is Carole Kirchner of Prudential Homesale Services Group.
People in similar circumstances will be grouped in the same class (such as families with young children) so they can be accountable to each other and support one another, Kosich said.
"It's a little bit like Weight Watchers," she said.
Putting a budget together and learning to manage it is a major focus of the class.
Participants also may discover that "the type of home they can reasonably afford isn't the same as the one their mom and dad had," Kosich said.
A starter house doesn't need to be a mansion, she said. "Enjoy where you are and not where you think you ought to be."
People need to sacrifice and go back to basics, Kosich said. "You can't have it all. You have to identify what's important to you."
Expectant parents Kim and Erik Mause, who just bought their first home, in East Petersburg, received financial counseling from Kosich for about a year.
"She looked at where we were and what we had to save," Kim Mause said. Kosich pushed the couple to start living off one salary while putting the other aside.
"We wouldn't have been able to get a home without Linda," Mause said.
There are organizations that offer classes or counseling for first-time buyers, including the Lancaster Housing Opportunity Partnership and BASE Inc.
Kosich is expecting young professionals and dual-income couples to sign up for her class — those who may be earning good salaries but are paying off car and college loans, and can't seem to save enough for a down payment.
First-time purchasers who buy a house by June 30, of next year also can take advantage of a $7,500 tax credit included in the housing bill recently signed into law by President Bush.
As far as budgeting goes, Kosich said there are a lot of areas where costs can be trimmed. Since most everyone has a cell phone now, people can save money by cutting back to a no-frills landline package, Kosich said.
And people should consider reducing their cable bill — or eliminating cable altogether, she said. "Is this something you could live without?"
Eating out less frequently is a big money-saver, too, Kosich said.
She also recommends relying more on cash and relegating the use of credit cards to emergencies. For instance, if you take cash to the grocery store instead of a credit card, you'll spend less and be much more aware of your limits, she said.
The keys are "how to manage with what you have and don't spend what you don't have" and "how to get everything for less," Kosich said.
Eventually, she said, "budgeting becomes second nature."
"We're getting people to refocus," Carole Kirchner said.
In addition to Kirchner, coaches are Kris Lundquist and Alex Reedy of Prudential Homesale Services Group; Anne Schlenbaker of John Smith Real Estate Group, Elizabethtown; Chip Trautman of Gateway Realty; and Mike Tropp and Jeff Bowman of RE/MAX Associates of Lancaster, Willow Street.
"We need to reprogram how people think," Reedy said.
The point of the class, Tropp said, is to teach people "to be able to do what they need to live the American Dream."
But the sacrifices made aren't going to be the same for everyone, Lundquist said. "It's what's right for you."
For more information on the class, call Kosich at 581-9300 or visit
www.AHomeOfOurOwn.net.
Paula Wolf is a staff writer for the Sunday News. She can be reached by e-mail at pwolf@lnpnews.com .
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