We did take the principal that we walked away with and put it all towards our current house. Because there were so many bumps along the road to closing on the sale of the old house, interest rates went up a half a percent from the first rate we locked into until the date we finally closed.
I'm giving all of this background because I read an article today about how the feds are ruining things for first time home buyers. Apparently, the current interest rate is too high for people's tastes. And it just was raised a quarter of a percent. To make things more miserable, it's a sellers market. People are staying in their homes "too long" rather than selling, and their values are climbing.
The whole thing honestly pisses me off because the interest rates are a fraction of what they were when we bought our first home. We didn't buy our dream home, we bought a home we could afford -- in a neighborhood we could afford. It was sold at a profit because we invested in a home we could afford, and that we could afford to maintain.
Is this a case that I am so old that I am bitter/crotchety? Or is this real estate/interest rate the pity party I think it is? As a person who lives a very frugal lifestyle so she can invest and save, a rise in interest rates would actually help me. Seeing my home value rise proves I made a prudent investment. I didn't speculate, I bought knowledgeably and responsibly.
TBG and I could not afford our first home until we had been married for ten years. It was a struggle too. We saved and invested to come up with the down payment, and we accepted the current interest rate of the day because that was what it was. Tariffs are an issue now, NAFTA was an issue then. People don't have pensions now, we didn't have a pension plan then. We had car payments with close to ten percent interest then too. There was sub-prime and predatory lending to look out for as well.
I guess I wish people would just suck it up and not complain so much. Life is hard when you are starting out. You're living a charmed life if it's not. Making responsible choices and living reasonably is what makes things a little easier as you get older. There are no shortcuts that I know of. I'm pretty savvy and can say with a decent amount of confidence that if there was a short-cut, I would probably have figured it out.
So.... is this tirade a sign of me turning into an old lady?
Agreed. It seems everyone wants to start at the top today with only the best. I don't think I've ever heard of any new (to them) home buyers interested in a starter home. At the same time, I don't know how anyone can afford to buy a home here in California.
ReplyDeleteWe are lucky that home prices here are not super high -- which is one reason we picked this region to be our home. I think HGTV distorts people's opinion of what they "need."
DeleteOMG, let me just say that I LOVE that brick house! I have always loved the look of that style and dreamed of owning something similar, but with three stories and having an apartment on each level, or a storefront (for my store) on the bottom. Yes, I remember those interest rates! They were crazy. In the 80's a handyman special in Dutchess County NY was a minimum of $125K. We couldn't afford it, so we ended up in PA. We made a lot of big sacrifices to get our first home.
ReplyDeleteWe loved the brick house but it was too big! We never could have afforded it in a nicer location. We were lucky to find another old house.
DeleteI had a similar conversation with a friend today. DH and I rented for a very long time, staying in as cheap a place as we could stand, socking money away for a down payment for our first home. We waited until we had enough socked away so the payments would be manageable in the worst case job scenario, not best. We bought the best house we could WITHIN OUR BUDGET, and stayed in it for a good decade until DH transferred across country. I never, for the life of me, understood the "mortgage crisis." Why did you buy a house you couldn't afford in the first place? And, if it happened to decrease in value during your time there, why did that somehow absolve you from paying your mortgage? Yeah, guess I'm old too.
ReplyDeleteWhat I couldn't get over when the house was on the market, was how people wanted to nickel and dime us to get the price down. Meanwhile there was nothing else on the market for the price in move-in condition. We were approved for twice as much in a mortgage but would have been fools to buy that high. People are unrealistic!
DeleteI have to chime in on the mortgage crisis. I saw a documentary movie about the whole sub-prime debacle (can't remember what it was called) but I just remember that they kept saying that "nobody saw it coming." Are you kidding me? I certainly saw it coming... and I don't know the first thing about finance. But I was working at a folk music school at the time, and when they started giving $250K interest only mortgages to banjo players, I knew it was only a matter of time before the whole thing came tumbling down!
DeleteMy sister is an attorney and at that time was working in the housing area as a student. She warned me of it. Told me it was going to cause a melt down on par of the recession. She said Hilary Clinton (our then senator) was warning about it. I told people that, and they thought I was kidding because they didn't believe banks would lend like that.
DeleteI like that house! We married in '66 and bought our first home a year later. We were poor, very poor. But, we bought a very small home we could barely afford. We had no furniture except cast off stuff at first. It was hard, but we did not complain.
ReplyDeleteDuring those years, the starter home was what you did. Now people won't even consider the small starters like you began with.
DeleteAgreed Al. I see so many "youngsters" buying their ultimate home, mortgaged to the hilt, as their first home. Same with cars. Wealth (however you define it) has to be built, not bought.
ReplyDeleteI don't get the need for the ultimate kitchen, and then people call out for GrubHub or Skip The Dishes every night!
DeleteI live in a meca of affluenza, where adult children's lives tend to continue to be fully financed by the parents. Our own children knew from the get go not to expect that unreality. Work for what you have, appreciate what you have. We didn't buy them cars, helped where we could with college, slowly transitioned their expenditures over to them during the teen years. This was not a miserly approach but rather to teach them about money, about priorities, the value of a dollar. My kids are almost 20-almost 26. Also, take a look at the home buyers on some of the HGTV type shows. They expect everything on their extensive want list, all top of the line, etc. Ridiculous! Fast forward and I am single, 2 kids at home, retired due to health, and in a modest 3 bed Ranch that I bought and remodeled last year. Cheaper for me to own vs rent. Great location, on public transportation etc. At almost 55 y.o., my household furnishings remain mostly second hand and of a quality one is hard pressed to find now a days. So yes, I am also feeling "old" in this respect.
ReplyDeleteI am amazed that home buyers on TV think kids should not be sharing rooms and should all have their own bathroom. Then there is the whole "en suite" thing. I must be missing something...
DeleteTotally agreed! It was actually good for the boys (age 25 and 22) to go with us to Europe to see that most people can't afford to own anything their whole life or until they are very old there, also hardly anyone has cars. They came back feeling like they have it pretty good here in Canada and they both have the option at some point of saving a good downpayment on a home. People feel entitled these days though....entitlement is not a healthy state of being.
ReplyDeleteI used to be on a discussion board with people from Europe and Australia. Many came to visit Niagara Falls, so we would host them. They couldn't believe the size of our houses or our yards in the US. I think we do have it very good, and no one needs to make our country "great again."
DeleteHahaha! Well, if you're getting old and crotchety, then so am I. When I bought my house the interest rate was 9.5% - my mortgage payments were double what my rent had been, and I bought in a neighborhood that many people would not even drive through at the time. But, it was what I could afford.
ReplyDeleteI dunno, I mean there's no question that Millennials have a tough time with student loan debt etc, but I often think that they have a ridiculously rosy picture of how "easy" all of the previous generations had it. I mean, I know I'm sort of an atypical case because I didn't jump into a career straight out of college like most people did, but for the first year after graduation I couldn't even afford an apartment - I rented a room in a friend's basement! Then I graduated to a crummy basement apartment - seriously it was 3 years after graduation before I finally got to enjoy the luxury of having windows! I just don't understand where they get these crazy expectations.
And don't EVEN get me started on other aspects of life besides the cost of living. I was once reading a blog post/sob story about how hard Millennials have it - and all I could think of was CatMan and what his life was like at that age. He got drafted and only escaped being sent to Vietnam through a typo on his orders! He ended up doing his time in an army hospital in California. Can you imagine how this generation would react if they had to face the threat of being conscripted into the army against their will?
I think the student loan crisis is real, but then I also see students using loan money to buy things that are not totally necessary. I was able to pay my loan off early due to an inheritance (rather than take a fabulous vacation). We then spent the next decade or so paying off TBGs. We didn't earn a lot so combining that along with the high car interest payments probably put us in a similar bind. We had high interest car payments, mortgage payments and also a loan payment at the start. Buying smart by also buying a double helped. But we lived on a lower scale than most people I knew or worked with. And before I got married, I had roommates for many years too!
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