Long-time readers know the struggle we’ve had trying to sell our house, which has been on the market since May 2015. For newer readers, we’ve had our 1,500 sq ft house (big house) on the market since May 2015. 🙁
Well, I have some news on the big house front. We received an offer two weeks ago and we’re under contract. The home inspection was last week and it was OK. I wait with bated breath for an appraisal and for the closing in May, assuming all goes well. If I don’t sound more excited than I should be, it’s because paying two mortgages was NOT part of our “crush all of our debt plan” for 2016.
Life doesn’t go according to plan, so why would I expect that trying to sell our house would be any different? It seemed like a simple plan, so what could possibly go wrong?
Sell the big house.
Use any equity to pay off debt.
Thus far, we’ve only managed to achieve step 1. Our small, 536 sq ft house is everything we hoped it would be. 🙂 Our bills are lower. We spend less time maintaining our home. We read more. We’re outside more doing things that don’t involve a lawn mower.
Because the house didn’t sell in summer 2015, we elected to take on another loan to cover the small house, thinking that it would be a short time until the big house sold and we could pay off both loans.
It’s nearly spring 2016 and we’re still paying two loans.
And we’re nearly underwater in the first mortgage. Why?!
Home values are fiction. Really. Comps are best guesses. Zillow has no idea that the elementary school in town was condemned and how that has obliterated the market. Your home’s value is at the mercy of the next buyer.
When it comes down to it, houses are only worth what other people are willing to pay for them when you leave. If you ever buy and sell a home, I sincerely hope that you will be in a situation where someone is willing to pay you at least as much as your mortgage balance.
Because of years of interest and PMI, we don’t have as much equity in the house. I wouldn’t wish this on my worst enemy. If you can, save for a proper down payment to avoid PMI. Don’t let banks talk you into more house than you can afford or anything less than 20% down on a mortgage. And if you haven’t yet, check out those amortization calculators for mortgages and see what a difference it makes when you get your ducks in a row before going out to purchase a home. Know what you are getting yourself into before you open house it up.
As if the situation with mortgages couldn’t get any worse, it actually does get a whole lot worse. Mortgages make you responsible for maintenance. Mortgages make you think you need Saturday afternoon home improvement projects. Mortgages make you think you need a job. Mortgages make you think you’re stuck at your job. Mortgages make you think you’re doomed to a life of soul-sucking corporate culture until 67 (or 62) when you can take meager distributions from an under-funded retirement account due to all of those years you were paying off your mortgage.
And the absolute, very worst part about mortgages? You can’t take them with you. Mortgages don’t care about your awesome new job opportunity in another state (or country). There are few very housing types you can take with you wherever you go, and many banks aren’t too keen on loaning thousands of dollars for mobile property that lacks a permanent address.
Credit card debt is, at least, portable.
Do you have a mortgage? If so, what should others know about mortgages before they sign up? How can others avoid the mistakes we made?
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