Mortgage Madness

I mentioned in an earlier post that the good folks down at Wells Fargo were willing to loan us $325,000. (Remember that these people have also recently taken lots of taxpayer money to get themselves out of a mess, but that's beside the point here. Or maybe it IS the point.)

Well, that got me to thinking. You should know before you read any further that I am a math nerd. (No really.) And I get a kick out of the mortgage calculators that can be found online. (Just search under mortgage calculators and you'll be amazed how many will come up.)

You should also know that I am a compulsive online home-looker. (Of course, I could blame this on having moved so many times.) ((Am I using too many parentheses in this post?!?))

The following houses are for sale in our future town of Fort Smith, Arkansas, and the pictures came from this site. The first one is very similar in size, age, and location to one we will likely be renting and will possibly purchase within a year.

It was built in 2000, has 3 bedrooms, 2 bathrooms, and is 1636 square feet. It is listed for $142,000. For the record, you can get larger houses in this price range if you're willing to consider a much older home and/or a less desirable location.

This second one is closer to what Wells Fargo has in mind for us.
It was built in 1994, has 4 bedrooms, 4 bathrooms, and is 3457 square feet. It is listed for $335,000. It's also located in what most consider to the be one of The Best Parts of Town.

(I know. If' you're reading this in many parts of the country, even today, you may be gasping at the inexpensive houses, but the principles below still apply, just on a grander scale.)

Would I love to have that second one? Of course! Do I want to be able to sleep at night? YES!!

Here's where it gets interesting: Let's compare loans of $140,000 and $325,000, each at 5.5% interest on a 30-year, fixed-rate mortgage. The principle and interest (P+I) payment on $140,000 is $795. For $325,000, the P+I payment is $1845. That's a difference of $1,050 per month.

Suppose you buy the $140,000 house but decide to make the $1845 payment on it every month, adding $1,050 to the required minimum payment. In just under 8 years, you would own the house free and clear!

Assuming a very modest appreciation rate, let's say that at the end of those 8 years, you sell the house for $175,000. Now that $325,000 house will only cost you an additional $150,000. ($175 + $150 = $325) Paying the very same amount that you have been paying all along ($1845 per month), you will then have paid off the $325,000 house in just 8 1/2 more years. In other words, starting from the day you buy the $140,000 house, you will have paid off the $325,000 house in 16 1/2 years.

Now, stay with me here. If you had bought the $325,000 house to begin with and made the same $1845 payment, at the end of 16 1/2 years, you would still owe $210,675 on it!

Of course, by the time you sold the first house, the second one would be worth (theoretically, at least) $411,700. If you still wanted that house, though, you could still have both houses paid off in less than the originally planned 30 years. (8 years for the first house and 16 years for the second house)

Like us, you may not have $1,050 extra every month to add on to a mortgage payment, and even if you do, there may be even better ways to invest it. And yes, there are lots of valid arguments for buying a nicer house to begin with. We may very well decide we just need/want more room. But doesn't it at least make you think about your dream home (and how to get it) in a different way?

My goal in this post, as with all posts on this site, is not to tell you that this is the only way home-buying, selling, moving, etc. can be done, but to give you something to think about, share our experiences, and maybe encourage you to think differently.

Short Update

Sorry I haven't written in a while. I've been waiting for our housing situation in Fort Smith to be finalized so that I can write all about how that has developed, but we haven't yet signed a contract, so I'm hesitant to send it out into blogland beforehand. Know what I mean?


Anyway, in the meantime, the U-Haul has been reserved (yay!), and we've gotten rid of some more stuff. Here's a picture from when we arrived at our storage room on Saturday morning.

That's my super-hunky husband sitting there in the rocking chair. Isn't he cute? That man can "sho nuff" pack a moving truck. I'm hoping he'll write a guest post for me later on. He can give you the scoop on the pros and cons of the various rental companies, the proper placement of boxes and furniture in the truck, etc. Remember that for all 10 moves (so far), we've moved ourselves. Twice, we've hired some people just to help with the loading. A few other times, some friends helped to load. More times than not, it was just the two of us! (Hey, don't laugh! I'm stronger than I look!)

Well, we got rid of a bunch of stuff, but somehow we didn't make a picture of the trash before it went into the dumpster, so you'll just have to use your imagination. Hopefully, we'll have a chance to do some more decluttering before we load up in a few weeks. If so, I'll try harder to get an "after" picture.

Home Sweet Home

I have finally realized that if this blog is to ever have more than 3 readers (thank you, David, Mom, and Lora!) I should perhaps try to make it a little more cohesive. I won't promise to never again rant or ramble about totally random things, but I'll try to keep most posts related to the main topics of this blog: moving, establishing a new home, and getting plugged into a new place. Who knows? Maybe someday we will live in one place long enough that I will have to abandon this blog entirely, but until then, these are subjects I have lived and about which I have lots to say. Or at least I hope so.




So with that in mind, let's start with finding a new home.




As I have written elsewhere in this blog, we are about to move for the 11th time since we were married almost 11 years ago. We have rented apartments and houses, and owned houses. Some of these choices were made with a more conscious desire to be in God's will than others, I must admit. The three houses we have owned I believe most clearly demonstrate how God often leads in these situations.

This is the first house we ever bought.

After looking at lots and lots of older homes that just made me sad, I had just about resigned myself to never finding something I would really like. Finally, just before seeing this one, the agent had arranged for me to see a lovely 2-story home on a little over an acre. It was beautiful! But we couldn't get in the front door. Or the back door. Or the side door. Eventually, we gave up, and then I saw The One. It didn't look like anything special on the outside, but I walked inside and "just knew." It's true what they say about that. You just know.

We had to leave that first house earlier than we had wanted to, but once again, God lead the way to the next house. I had fallen in love with this house (or more specifically with the room that was to become Nathan's nursery) online before I actually saw it. The first day I went with our agent to look at houses (I should mention that we've never had more than 2 days to spend looking for houses before putting in an offer), this one was not listed. It had been under contract twice before we bought it, and both times, the buyers' financing had fallen through.

Our usual process for buying a house is that I find several online that I like, I go to see several with an agent, and then David comes to see my favorites. On the second day of looking, this house was once again listed, and I quickly narrowed my favorites to this one and one on the neighboring street. Once again, we were unable to get into see the other house. We took that to mean it wasn't the house for us and made an offer on this one.

Our last house was perhaps the most eventful purchase so far. Once again, we were moving quickly, so I drove up to look at some houses with an agent, and the next day, David went back with us to my favorites. After looking at those plus more older homes to satisfy David that we could not, in fact, afford a newer house in the location we wanted, we put an offer in (albeit half-heartedly) on a house very similar to our first two homes but far away from our target area. The sellers made a ridiculously unaccomodating counter-offer. While mulling it over, David asked me to search online again, upping our target price by just a few thousand dollars. This is the house that appeared on our screen:

Can you hear the choir singing in the background? :) After asking our agent to check it out for us (we were almost 4 hours away at the time), we put in an offer, sight unseen, on Christmas Eve. It was formerly a foreclosure home, so the price was right. It was in our most desired location. And again, we just knew.

Once again, we are in the midst of this process, even though we are looking for a place to rent rather than buy. I'll let you know later how it all turns out.

Here are some tips for finding a new home before you move:

1. Pray - We have often prayed, "Lord, please let us see what we need to see and not see what we don't need to see." He has honored that prayer. In 2 of the 3 house-buying trips we have made, there was at least one house that we literally couldn't see. Don't be afraid to try the backdoor, but don't force the issue. Know that God is involved in the details.

2. The internet is your best friend. Do your homework before meeting with an agent. In addition to national sites such as Realtor.com and Coldwell Banker, many cities often have local real estate sites. If you are new to an area, one of the best ways to learn about the areas within a city is to research the schools, even if you don't have school-aged children. There are several sites for this purpose, but I recommend School Matters. Also, don't be afraid to try networking sites such as Facebook. I made a friend who is from Fort Smith but (at the time I contacted her) was living here in north Alabama. She has since moved back to Arkansas, and I have made many other contacts through her. In fact, we found the house we are likely moving into as a result of contacting a person that she had suggested.

3. Don't choose the largest home in the neighborhood or subdivision. The larger homes will, over time, increase the value of your home as well.

4. Do not, under any circumstances, spend as much as the bank will loan you. These calculations apparently assume that you will never leave home, will only eat macaroni and cheese, and will certainly not be giving any of your income away to church or other charity. I recently contacted Wells Fargo to discuss the terms of a mortgage in case we decided to buy a home in the near future. It turns out we could get a mortgage for $325,000.00!! Out of respect for my husband, I will not divulge our income, but believe me, we have no business even considering such a home! Figure out how much you can afford to pay per month, subtract some from that amount, and base your home search on that number. And remember that the folks at Wells Fargo and their counterparts make money on commission! There's nothing wrong with that, but always remember it.

4B. Shop around for the best mortgage. Lenders vary on interest rates, points, origination fees, and other closing costs. Know what is more important to you: cash to close or monthly payment.

5. Do not buy a house until you have sold your last one. Hopefully, in this day of mass foreclosures and economic downturn, this one goes without saying. If you can afford to pay both mortgages, congratulations! I hope your job is very secure. (I'll write more on selling a home in a later post.)

6. Do not even think about buying a house without getting a home inspection. Spending that $300 could end up saving you thousands. While you're at it, if the house you are considering is more than 10 years old, have a heating/air conditioning person take a look at the unit. An inspector generally just checks to make sure it will come on, and he won't turn on the heat in the summer or the AC in the winter.

7. A can of paint can make a world of difference. Don't pass on a house just because you don't like the color in one room.

I'm sure I could think of many more things we have learned along the way, but I'll stop with those for now. The basic idea is this: learn as much as you can, pray hard, trust that He has opened and closed the appropriate doors, and prepare to Bloom Where You're Planted.