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It's not hard to figure out why the Rhodes family would want a house of their own. Their son Paul's passion for music makes it clear right away.
His mom, Tamika Rhodes, says in their last place, a two-bedroom apartment, Paul couldn't play the drums because it would have driven the neighbors crazy.
Now he, his two sisters, mom and dad live in a big, five-bedroom house in St. Paul, Minn. Rhodes says they all feel much more comfortable.
At the height of the housing crisis, low-income Americans had many opportunities to buy a home with the help of subprime mortgages, which proved to be disastrous. But those battered by the crisis continue to find paths to home ownership, despite financial disincentives.
"Our main goal of owning a home is a place that we can really call our own — a place that we feel safe and secure," Rhodes says. "Just a place where we can be free."
Out Of Debt, Into A New Home
Rhodes and her husband's path into this home is amazing, considering the foreclosure in their recent past.
A few years ago, they bought a home with a subprime mortgage that had ballooning payments. Rhodes wasn't working year-round and had a low-wage job. They were pulling in about $30,000 together. The house became unaffordable; they lost it to foreclosure, and their credit scores plummeted.
A local bank and a nonprofit called Build Wealth, MN, helped them do some intensive credit repair.
A couple years later, Rhodes and her husband make about $50,000. With three young kids, that still qualifies them as low-income by federal housing standards for the area.
But they were able to close on this house in December for about $146,000. Their monthly payment is less than $1,000, which makes Rhodes kind of giddy.
"That's the blessing in it," she says. "We're actually paying less now than we were, even in the apartment."
It might seem surprising that at a time when mortgages can be difficult to get, a bank would take a chance on the Rhodes family and get them back into a home.
"Oh yes, [we're] definitely willing to work with them," says their loan officer, Vickie Reardon of Bremer Bank.
Reardon says she works with lower-income borrowers all the time.
"There [have] been many files I've started and worked with them for over two-plus years before they've actually closed and purchased," she says.
Nationally, the share of mortgages made to modest earners doesn't seem to have dropped off. In fact, it hit its high point of the decade in 2009 at 34 percent. At Bremer Bank, the share of mortgages made to low-income people nearly doubled between 2005 and 2011.
Reardon says these days a lot of Bremer's loans to low-income people are made through the Federal Housing Administration. It requires smaller down payments than traditional loans do. But she doesn't think that's driving people of modest means to buy houses.
"[Low] interest rates and lowering home prices is really what's helping them get into those properties," Reardon says, "because I don't think FHA or any of the other programs really have lowered their standards at all."
A 'Double Whammy'
Of course, there's a downside to the drop-off in home prices. The housing market in the Twin Cities is down about 35 percent from its peak a few years ago. Houses aren't quite the smart financial investment people once thought they were.
Additionally, housing expert Alan Mallach says, the financial benefits of home ownership can be even lower for people who don't make much money. Mallach published a study in 2011 for the Federal Reserve Bank of Philadelphia on lower-income home ownership.
"It's a double whammy. Your basic housing costs to begin with are going to be a much larger chunk of income, which means you have less slack," he says. "Plus, the likelihood that your house is going to need repairs is much greater than if you buy a much more expensive house."
Richer people who live in the fancier homes are also more likely to reap big tax benefits if they do repairs on their houses.
Strength In Stability
Still, Mallach says, if people of modest means hold onto their houses and don't go into foreclosure — for which they are at much higher risk — they can reap some big benefits. For one thing, their children do a lot better than renters' kids because they're not moving around as much.
As her children chat in the kitchen, Rhodes says the stability of home ownership is definitely something she's relished since her family moved out of their tiny apartment.
"My kids before — during the tough times — I noticed how they were more withdrawn, and they argued so much more with each other," she says. "But being stabilized has really brought all of us together more as a family."
That stability is more important to her than whether a home is a profitable investment.