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I'm one of many parents who listen to our children tell us they can't afford to live where they grew up. I now have a granddaughter and my little family is living in Colorado where homes are half the price they are here. My daughter's family lives in a rental that is 3 bedrooms, 2 baths, full garage, big yard, with a park across the street for $900 a month. Can they find that here? No way. Can they find a home like that to purchase there for under $300.000 - yes. Can they find that here - no way. Yet I want them home, close to me so I can be a real Nana to my little Destiny and I can be close to the beautiful daughter I raised and love so much. (Yes, Mike, you count too, but I didn't raise you!)

The first time I heard encouragement in my daughter's voice that they could come home and buy a house here was after she read my last article on Affordable Homes. I'm getting people to think that they CAN do this - they just have to make some compromises on the house in order for it to be located in stunning Sonoma County! My kid is not known for her desire to make compromises, but that's one of the joys of growing up - you learn that life is all about compromise! If you want to move forward - you make them. Forward motion is a step-by-step process and you can't skip any to get to your goal.

So Aleta called all excited after researching the internet. "Mom, I found a house in Camp Meeker for $130,000!" I immediately pictured a run-down summer cabin falling off a steep hill (it is... I looked it up). If she and Mike were professional carpenters with money in their pocket, I'd say - go for it! There are many wonderful people living in that community and it's part of the Salmon Creek School District and close to Occidental. So what if there isn't a yard for Destiny to play in. There are other options close by. Build a big deck! But the reality is that they have little skill in building and no money. So this is when I bring up the very Mom-like phrase... Dream Real.

When I purchased my fixer-upper, it functioned as a home. OK, the roof leaked the first year, but I laid plastic sheeting over it until I could put on a new roof. That little cabin functioned as home for 17 years before I could afford to do major work on it. The key is that it functioned - including having a great yard for my daughter to grow up in - in a good school district, which is very important to parents. I could afford to fix little things along the way. And that's part of what I mean by Dream Real. Know your skills, your limits, your financial limitations, etc. Make sure your feet are firmly planted in reality when you make such a huge purchase. You don't want to suffer with the compromise - just compromise!

Hans Bruhner (Ask the Loan Man columnist) says "I would add that in my humble opinion, the formula for being able to buy a home is this: 80% desire, 20% other stuff like need, ability etc. That is not very eloquent, but the bottom line is that if they want it bad enough, they will make it happen. Early in my career, I saw people who I thought could not make it happen and they proved me wrong (with me getting them the mortgage!) One man who was especially challenged getting a loan is in the same house after about 6 years. He has a good mortgage and the house is in great shape. He has good equity and is considering buying a house in Bodega Bay!"

Then I ran into local realtor Tom Shula and we talked about getting people into affordable homes. He brought up something that connects right into this Dream Real concept. Some people aren't meant to be home-buyers and there's a litmus test that defines the people who can from those who can't have the responsibility of a mortgage.

Do you pay your rent on time - every month - no exceptions? Landlords are more forgiving than mortgage companies.

Can you pay for your life from your checkbook and not go too deep into your credit card debt?

When emergencies come up, can you handle them financially?

Do you have a savings account with real money in it?

When you add up your income and compare it to your expenses is there money left over each month? Even a little?

Is the roof over your head costing you less than a third of your income?

Can I answer yes to all these questions? No.

Am I a home-owner? Yes?

Was I able to answer yes to all these questions when I bought my home? No.

BUT - have I been able to pull it off through thick and thin over the years? Yes.

So - is the litmus test the be-all and end-all of whether you have the personality as well as means to buy a home? No. But should you take a good long look at your life and see if you have what it takes to ride the waves of home-ownership? Definitely.

Being the kind of person who pays bills on time with little exception is a start. Also, being the kind of person who doesn't need to drive a car with a monthly payment, doesn't need to buy new clothes, doesn't need to eat out, etc. etc. helps a lot. When my daughter complained that our home was too shabby to bring her friends to, I shrugged it off even though it hurt. I worked hard for that little cabin and was proud to even own it! Now she's old enough to see for herself what it takes to run a life. She's also learning that the compromises in luxuries and new things, etc. look OK when it comes down to knowing that the building you live in belongs to you.

For some people, that's important. For others they could care less. If you are the kind of person who wants to know that home is your home, then look long and hard at your financial life. What is important to you? How do your priorities line up. If the hot car, the new clothes, the fine home are that important... then rent. Home-ownership is more than a monthly mortgage bill that compares with a rent bill. When repairs need to be done - YOU pay for them. When you don't have enough money to pay bills, the mortgage comes first because the price you pay for not making your payments is losing your home and everything you put into it. That's too big a risk to take.

As all risk-takers will tell you, there's a big difference between taking risks and taking chances. Taking risks involves analyzing the situation, making sure you are protected and moving forward with confidence. Taking chances is pure emotion with no protection or caution. That's not something you want to do when buying a home. The gains can be great on many levels. But the losses can be devastating. Go into this with your research done, your finances secure in your mind and your heart feeling good and confident. If you are not scared, then you are Dreaming Real.

Affordable Homes Part 5 »