THE FIRST STEP, by Mike Benbow

Nine years ago, Shane and Danica Cavanaugh of Everett began married life together by declaring bankruptcy.

It wasn't because we didn't want to pay our bills, Danica Cavanaugh said, explaining her husband had been in a traffic accident that spawned insurmountable debt.

The Cavanaughs went on to have two children, paying their bills as they went and living in rental homes because they had no credit.  "I didn't think we'd really be able to buy a house," she said.

Today the Cavanaughs live in a 1,000-sq. ft. home in a quiet Everett neighborhood two blocks from where Danica grew up.   Their two boys, 6 and 8, play in a huge fenced yard and attend the same school she did as a child.

The Cavanaughs and a lot of people like them in Snohomish County have a message for those who think they can't afford their own home:

"It was stressful, but it wasn't that hard," she said.  "I was honestly shocked at how easy it was."

Houseing professionals say it's easier than ever to qualify for one of the many government programs that ensure mortgages will be repaid.  Some offer low interest rates and require little or nothing for a down payment.  "I can get a house for anybody if they're open to different options," said Tim Hiegel of Re/Max Masters inc. of Everett.  Hiegel, who represented the Cavanaughs is a buyer's agent specializing in finding homes for first-time buyers.  "Ninety-eight percent of them don't have any money," Hiegel said of his clients.  Dave Rodgers, director fo a single-family division of the Seattle office of the U. S. Department of Housing and Urban Development said too few people realize that homeownership is within their grasp.  "People shouldn't assume they can't do it," he said.

Rodgers said homeownership has a downward spiral since the 1970's, and HUD "has been on a mission over the past two or three years to try to steamline the way these things work."

Lenders now qualify buyers, underwrite the loans and do much of the paperwork previously handled by the government.

"We're just a loan insurance company when you get right down to it," Rodgers said.  Down payment requiremnt have also been lessened, and relatives are now allowed to give money toward the deal.  In the past, they could only make loans toward the down payement, which afected the buyers' debt level and therefore lowered the amount of the home they could afford.

Because Danica Cavanaugh's father contributed about $2,500 toward the down payment, the Cavanaughs were able to buy their $101,000 home with just $1,700 down, money they saved by living with her mother for four months before their home deal closed.

Halley and Darrel Danger paid just $1,000 down for their $114,000 home in Marysville last year.  Like the Cavanaughs, the Dangers were forced to declare bankruptcy because of overwhelmibing medical bills and thought they'd never get into a home of their own.  "I still can't get a credit card," Halley Danger said.  But I could  buy a home.  Figure that one out."

Last year, 2,100 homes in Snohomish County were financed through FHA loans, Rodgers said.

About 7 Percent of lat year's loans in the county were for condominiums, but that figure jumped to 17 percent last month, probably because more condos are being built, he added.

Zakir Parpia is president of the Master Builders Association of King and Snohomish Counties and of Himalaya Homes, which focuses on affordable single family houses.  He said his homes sell for $129,000 to $149,000.  Parpia said his job is "rapidly getting harder" because of escalating land values, partiularly in south Snohomish County.  "If you look at the innovations in home building, inflation hasn't really affected (the cost of) sticks and bricks," he said.  "The only culptris is land.  Land has gone up at an incredible rate, way beyond the cost of inflation.  It has more than doubled in price in the last five to seven years."

It's Parpia's belief that prices for new homes are rising muh faster in recent years than is the ability of the first time buyer to afford them.

For that reason, Parpia, Hiegel, Rodgers and other agree that anyone thinking about a house shouldn't procrastinate. 

"You've got to get equity," Parpia said.  "Once you get on the train (of homeownership), the train keeps moving, gaining value.  It becomes easier to switch to a bigger house because  you've gotten some value in where you're at."

Hiegel said that although home prices have risen in recent months, there are still modestly priced homes available for first-time buyers, particularly in north county.  "Everett and Marysville have some tremendous buys out there," he said.  "A lot of them are under $110,000."

How do you get started?

Hiegel recommends that potential buyers to go a real estate agent or mortgage broker and investigate what's available.  And don't give up if someone tells you you're not qualified, he said.

"A 'no' is only one door that does not open," he said.  "It's just one person's opinon.  A lender who tells you you don't qualify isn't going to tell you about the program down the street."

Jesus Cruz, community development officer for Washington Mutual, recommends that people take a free class to find out about the home-buying process offered regularly by the lenders and real estate professionals.  "they need to be educated," he said.

Washington Mutual has a program for first-time buyers.  It also recently agreed to work with Housing Partners, a Snohomish County business that allows people to rais their down payment through 30 hours a week of sweat equity during construction.  Cruz said many other financial institutions also have excellent loan programs and clases for first- time buyers.

The state Housing Finance Commission sponsors free five-hour classes for first-time buyers that provide good, unbiased information.  The next one in the area will be held Wednseday and Thursday morning in Everett.  You can call (800) 767-4663, ext. 775 for time and location information of this and other classes and to register.

In addition to getting an education, Rodgers also suggest potential buyers protect their credit by paying off bills and they start saving a little money toward the down payment.

As a buyer's agent, Hiegel represents only buyers in the transaction.  He gets his pay only when the deal is done by splitting the commission paid by the seller to the listing agent.

Hiegel has his clients fill out preliminary forms so he can do a credit check and see exactly what must be done to repair their credit.  "I've had some people that I've worked with for a year to get them on track to get their credit cleaned up," he said.  Mostly, it' a matter of paying off old debts and writing a letter to explain the reasons behind some late payments listed on the credit report.

Then Hiegel shops various lenders to find the best rates and to get preapproval for a loan.  Preapproval, he said, is important because it means that the home buyers have the loan sewn up and he can negotiate with the sellers to have them, for example, pay all the closing costs.

"Cash is powerful," Hiegel said.  "When I get up to the seller (to negotiate) I can say, "If you help this buyer, I'll get you your money in the thirty days."