Dream Home or Dream On: Part II

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Knoxville (WVLT) - Foreclosures. Rate hikes. Falling values. Are fears of the mortgage meltdown preventing you from trading up, or jumping into, a home of your own, even though East Tennessee has plenty of choices, and decent loan rates?

Volunteer TV's Gordon Boyd finds Tennessee, and many lenders, still offer plenty of pushes to plunge so that you can dream home, rather than dream on.

"It's just time, we don't want to rent anymore," said Barry Conatser, who's looking for his first home.

"It's time for us to have our own place," Barry's wife, Sarah said.

After three months, Sarah and Barry Conatser's house-hunting's getting more urgent, and not simply because their first baby's due in February.

"It's the biggest thing we've ever done. I mean it's going to be everything that we have, and if we can't come through on our mortgage, then they're going to take everything we have," the Conatsers said.

"The lenders are basically tightening up because of all problems they're facing," said Joe Garrison from Consumer Credit Counseling Service said.

"Everything now depends on credit score," said Jim Ford from Knoxville Area Association of Realtors.

"People are very fearful of purchasing a home right now, for the wrong reasons," said Chrissi Rhea from the Mortgage Investors Group.

Mortgage Broker Chrissi Rhea and Realtor Jim Ford hold that East Tennessee's home values should hold.

"I don't think we're going to see a huge drop in prices, but perhaps not as big an increase," Ford said.

Getting approved for a mortgage, they say, depends on how you answer several key questions.

"You got some savings?" Gordon asked.
"Yes," the Conatsers said.
"Got some 401Ks?" Gordon asked.
"Yes," the Conatsers said.
"Do have any credit card debt?" Gordon asked.
"No," the Conatsers said.

Sarah and Barry, or you could be in line for a zero or low down, fixed rate mortgage, provided the credit score is better than 650, and you have the tax returns and paper to prove your income and assets.

"Fannie Mae has a wonderful 100 percent program," Rhea said.

Tennessee even has a couple of programs that will give you money toward a down payment. You simply have to take a couple of credit management courses first.

Offered through Consumer Credit Counseling Service covering

"The real estate process from beginning to end, how much money you make, how much you can afford--then your budgeting," Garrison said.

Including some potential budget busters, such as: assuming mortgage payment that takes a fixed percentage of your income covers the cost of your house. Beyond taxes, insurance and services: credit card debt and contingencies. For the Conatsers contingencies read: baby:

"I want her to have a better life than I had, a better life than she had, and if we buy a house that takes up every bit of the money that we make each month, then our child's not going to be able to have that life," the Conatsers said.

Making the top search priority, patience

"The more than we put into looking for it, looking for what we want and what we want to get out of it, the better chances we'll have of getting a good deal," Barry Conatser said.

Wednesday: How, the market looks if you're moving up, down-sizing, or thinking about re-financing.

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