A tale of three mortgages

Author: Ashley

25 Sep

I have always wanted to raise my kids in one house. I wanted to buy a home, plant a small tree, and then take the kids pictures in front of that tree every year. That way we could look back and see our kids and that tree both growing up and putting down roots together.

When we bought this house we planned ahead. We bought a house a little farther out of town than ideal in order to get a bigger home. One with a bedroom for the baby we hadn’t made yet. We planned (and still plan) to live here until the kids have moved out. Then we’ll see. Maybe we’ll move, maybe we won’t. We pay extra every month so that we can get the mortgage paid off as quickly as possible. I want to own this house! And yes, we planted a tree when we moved in. Two in fact.

The Realtor who sold us this house happened to live about 10 houses away. One day he was talking to us about our mortgage and he said something like “But it’s not like you are going to live here for 30 years.” And we both responded “Yeah we are!”. He was shocked. He sold his house just after the market turned, in about March of ‘06. He sold it for $50,000 less than the high, which at the time seemed so low, but the house has gone down another $70,000 since then. So overall he did ok. I’m assuming he bought another house though. And the new house is subject to the same downturn in the market, so is he better off over all? Probably not. And he is out the costs of selling and moving, and the house did sit empty for a few months. So he is out those mortgage payments too.

Then a few months after that I was talking to my neighbor. He liked to talk… a lot. He was one of those guys who does a lot of talking, and not a lot of listening. He was going on and on about selling his house because he got some great property across town… blah blah blah. It’s an equestrian lot (No he doesn’t have horses.) … blah blah blah. And then he asked when we were planning to sell. I pointed to the tiny bundle in my arms and said “Oh, not until after he graduates from high school.” His eyes about popped out of his head. He couldn’t believe it. I guess because we both still had a ton of equity in our homes. He thought I was an idiot for not “cashing in”.

He took an equity loan on the house next door to put down on the property across town, and put the house on the market. It sat empty for a long time, probably six months or so while property values fell, and fell, and fell. Then last Christmas he got some renters and that’s who is living in the house now. I’m fairly certain that he didn’t get enough rent to cover the mortgage. So he is losing money by the bucket full. Not does he own two houses in this market, he is still paying part of a mortgage on a house he doesn’t live in. I don’t know how he’s doing it. I really don’t.

Pic by: Mike.Wilson

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5 Responses for "A tale of three mortgages"

Annie Jones September 25th, 2008 at 12:19 pm 1
We bought our house in ‘06. Things could change, but our plan is to live here until retirement. That’s probably 35+ years away.

We got the same reaction when we bought our van in ‘06. The salesman asked us how long we expected to keep it, and we said in unison “Until it dies!”. He just couldn’t believe we weren’t going to trade it in after a year or two.
Bruce September 25th, 2008 at 4:05 pm 2
I have several clients who are “making it” with second jobs. Married couples where both have second jobs. I think my loan is far to high and there is no way we could sell this house for what it worth so we’re stuck here until “it dies”.

Great post.
Kristy September 26th, 2008 at 5:05 am 3
We get the same reaction about our cars and house as well. We plan on staying forever if possible or when we decide to downsize after the kids go to college.

I am driving a 1999 Pontiac Grand Am with 165,000 miles on it. When I had DD two and a half years ago, my coworkers thought I was going to trade it in for a “safer” car like a minivan or SUV. I told them no way. I am keeping it until it dies or I feel its not safe for me to drive anymore. I am having another baby in April and though it will be a little tight on trips, we are keeping it. I am not looking forward to a car payment!
LAL September 26th, 2008 at 10:41 am 4
We are planning already for our third home in the next 5 years. We had our first condo at 22, second townhouse at 26 and third will be my early 30s likely.

But unlike most people we bought only what we could afford each time. First time a 1 bedroom condo 570 sq ft. Everyone made fun of us and laughed when we said it was adequate. They said we should have stretched and bought a 2 bedroom condo. We said no, we can’t afford it.

Then we bought a townhouse, in a nice neighborhood. But everyone again said to us why not just buy a home. Geez a lou! We have 3 bedrooms, no kids! And we are planning on having 1 child in our home. We didn’t need a house and we couldn’t afford it. See a pattern here?

Our next move will be to a single family home. I don’t know if we’ll stay forever, depends on the location, job, and immigration situation. So we’ll try hard but I won’t promise anything. I learned never say never.

So I will be the person continually trading upwards. Is it a bad idea? I think it would have been a worse idea to buy something we couldn’t afford than something we can afford!

Besides maybe one day we can buy a home we really love. We’ve loved our condo and townhouse a lot. And feel great pride but we still sigh over single family homes.
Blake October 1st, 2008 at 8:11 am 5
@ Kristy,

I feel the exact same way about my Civic. I’m going to drive it until it quits or until the maintenance and repair bills start getting out of hand. I’d rather drive an older, reliable car than saddle myself with an auto loan.

Ashley,

I’m glad you can see beyond what other people may consider normal these days. Look at Warren Buffett. That dude has been in the same house for 50-some years I believe! lol. I love your tree idea; that’s really neat!