Choosing to own: Low rates, down payments mean first-time homebuyers have options

Kieley Fox and her now-15-year-old daughter had cycled through rentals and living with her parents, until the single mother decided she’d had enough.

“I had just been making all these changes in my life, I realized that I wasted a lot of money doing nothing,” Fox said. “I wanted to buy a house.”

At 41, Fox said she had a wake-up call that many first time homeowners are experiencing, even as the housing market remains tight in Spokane and across the nation. Millennials, that sought-after demographic of 23- to 38-year-olds, are beginning to receive credit to buy homes at a rate greater than older generations, according to research conduct by Realtor.com. For the first time in November, millennials made up the largest share of new home loans by dollar volume, compared to baby boomers and those from Generation X.

“I think people are starting to get more wise about their financial security,” said Marianne Guenther Bornhoft, a broker-Realtor with Windermere-Manito in Spokane who helped Fox find her house. “You’re paying for someone else’s life. It’s borrowed time, and you don’t get any equity.”

Fox had been looking for a permanent place but had yet to walk into a lender’s office to see what she could afford. She was also looking for what she called a “sturdy” home in a safe neighborhood, one where the longtime renter would not have a lot of fixing up to do.

“I had been looking for a year, just kind of seeing what was out there,” Fox said. “There was nothing out there, that’s why I stayed at my parents’ house for so long.”

Meanwhile, lenders have been pitching their younger clients on the value of home ownership. Buying a home allows an owner to build equity once they get past the hurdles of a down payment and plan for payments at a certain interest rate, said Jeff Mularski, real estate production manager for STCU, both obstacles that are alleviated somewhat by low interest rates and payment plans for qualifying borrowers.

“Right now, with first-time homebuyers, if they’re able to get in at the right price point, they’re going to find that buying is currently less expensive on a monthly basis than it is to rent,” Mularski said.

“There’s a lot of nice loan products out there for first-time homebuyers with little to no money down,” he added.

Federal Housing Authority loans are available with a down payment of 3.5% toward the purchase of a home, provided the borrower has a qualifying credit score. There are also zero percent-down options for qualifying borrowers from the Department of Veteran Affairs and the U.S. Department of Agriculture.

Building equity can allow an owner to find lines of credit to reinvest back in their homes, say to finish a garage or basement to potentially add to the resale value of the property.

Fox said she was able to save enough to get a conventional loan to pay for her house near Finch Arboretum. She thinks that’s what helped her stand out from the pack with the seller, the son of the previous homeowner whose 1942 rancher was on the market as the result of an estate sale. Fox kept two blue-and-red star decorations affixed to the outside of her home in homage to that previous homeowner, who was well-liked in the neighborhood and had previously served in the military.

“I just kind of wanted to honor the red, white and blue,” Fox said. White shutters, recently installed, complete the patriotic look from the street.

Now, the first-time homeowner is considering what work on the home she’ll do next after restoring the hardwood floors in her living room. She’s looking at digging up the turf in her backyard to install a fire pit and other features more befitting Spokane’s climate, all things she couldn’t do in her rental units.

Purchasing the home did come with some headaches. Fox waited a couple of months after closing in August to move in so she and her family could repaint the living room and deal with a corroded pipe in the kitchen.

“There was a pipe that completely rusted out, and I had water leaking into my walls,” she said. “I looked into filing a homeowner’s claim; fortunately, I had set some money aside to deal with it. I thought to do that.”

Mularski said prepping for some move-in expenses is something first-time homebuyers neglect to do after signing the paperwork on their house. STCU is holding free homebuying workshops this spring in Coeur d’Alene and Spokane specifically tailored to first-time purchasers and what they need to know before jumping into the experience.

“There’s occasional issues with a leaky roof or the need to replace some carpeting, little repairs that come up,” he said. “You need to own a lawn mower.”

For Fox, it was she and her daughter shoveling snow out of their driveway during a wintry February that reminded her this house was hers and she was responsible for it. She counts herself lucky for finding a place so quickly, and so close to where she wanted to be, that she can’t imagine going back to renting.

“I love my home,” Fox said. “I’m literally in love with it.”