Young couples often struggle with two mortgages

Vince Helou of Bartlett asked Kara Murphy of Carol Stream to marry him in August. She said yes and the couple is eagerly anticipating their wedding day. However, there are two major hang-ups to their plans her townhouse in Carol Stream and his duplex in Bartlett.

The couple hasn't even set a wedding date because they need to sell at least one of their homes before they can afford to buy another house together. And they are determined not to marry until they can return from their honeymoon to a single house where they can one day start raising a family.

When you factor in the depressed real estate market, Helou and Murphy really have no idea when they will be able to move on with their marriage plans.

Murphy's 1,700-square-foot townhouse has been listed since early October and, even though the pair recently did major updating and renovating of the property and priced it to sell, it has only had a few showings.

“I am sure that we are not the only people out there who are going through this,” Helou said. “It is really tough to balance two mortgages; pay for a wedding; and set up where we will be living together.”

But the two strongly feel they want to close one door before they open another one, he explained.

“Once Kara's townhouse sells, we can take the principal and buy a new house with it. Then we will try to sell my duplex or maybe we will rent it,” Helou said. “But we certainly can't afford to rent out both places and still buy one for us to live in together.”

If they can sell her townhouse by early spring, they are hoping they can still get married by August or September 2011.

Currently Helou, 33, and Murphy, 35, are living together in Helou's duplex while the townhouse, which she purchased in 2003, is on the market.

“We chose to sell my place first because I have owned it since 2003 and never refinanced, so I still have some equity,” Murphy said. Helou, on the other hand, purchased his Bartlett duplex in 2005, near the height of the market, and refinanced in 2008.

So the couple began working on improving the townhouse and making it “show ready” last spring. It has all new carpet, new ceramic tile, new appliances, new kitchen sink, new granite countertops and was totally repainted.

“We gambled on targeted investments so that buyers could distinguish it from its neighbors,” Murphy, the executive director of Access DuPage, a nonprofit health care company, explained. “It remains to be seen if we were smart to do that or not.”

But Helou and Murphy did much of the work together and grew closer for the experience.

“We went from being Joe Schmos to being carpenters, painters and plumbers and it was fun,” Helou, a financial analyst for a car insurance company, said.

“We have realistic expectations about the market and priced it that way at $199,500,” Murphy said. “But it is hard to compete with the foreclosures and short sales, as well as with the new construction that is out there.”

Both are philosophical about their predicament.

“I had previously owned a condominium in River Forest that almost doubled (in value) in the 4½ years that I owned it. I was happy to reap those benefits so it would be sour grapes for me to complain now that the market has changed,” she said.

“Besides, we are selling in a bad market, but we will also be buying our new house in a bad market,” she added.

Helou agreed. “I feel sorry for those people who have to move because they can't afford their house any more but they can't find a buyer.”

When they are able to begin looking for a new house together, both agreed they will probably look in Carol Stream, Geneva and Bartlett, Helou said.

And they want a single-family home with the closets she craves and the roomy garage he wants. It needs to be in a great school district and have lots of room to raise that family they want.

“It also needs to be a house that can weather future real estate downturns,” Murphy said, “because I have now seen what happens when you choose foolishly. It has to be a house where we won't mind spending many years.”

Jack Persin, managing broker of Ryan Hill Realty in Naperville and president-elect of the Mainstreet Organization of Realtors in the West and South suburbs, said that Helou and Murphy are certainly not unusual.

“It is the buyers in their early 30s who bought their condos or townhouses for top dollar at the height of the market who are finding themselves in this position,” Persin said.

“We tell them that they can rent out their current homes in order to cover their principal and interest payments, but they run the risk of home prices dropping further,” he said. “So we counsel them to get their condos, townhouses or houses on the market and sold. Then they can buy something where they only have one mortgage, usually at a much lower interest rate than they were paying for their other homes.

“Real estate prices may be down to the levels we saw in 2000, but we are finally seeing increases in the number of housing units being sold and that is a good thing,” Persin said.