...as I sit on the bottom of a sea of financial potential in my underwater home.
It's hard to write off buying a house in 2007 as a mistake. I like my house (picture at right), I love having a garden, and I was tired of being a renter. That said, it is a struggle to watch my house's value continue to sink and not feel a bit despondent. It is a struggle to see interest rates drop and know that I can't take advantage because I am underwater with my loan. I know there are advantages to be had in this crisis for those who are prepared to take advantage. Sometimes something happens that drives it all home.
Yesterday I was looking online at homes for sale near where I live and one came up that caught my eye. This cute 1920s bungalow with a studio cottage in the back, on a really nice street was for sale near my neighborhood for only $400,000. Where I live that is crazy low, houses on that street were selling for $600-800K+ two years ago. I started dreaming of owning that house and fixing it up cute. Mr. K and I could have the 2 bedroom main house, Mr. K could have his office and I could have my dining room back. Our roommate could rent the studio instead of our 2nd bedroom. I'd only have to share the bathroom with Mr. K. Or, we could rent out both places, which would rent for enough to cover the mortgage and taxes, while staying in our current place.
I mentioned the idea to Mr. K and he was actually excited so we did a drive by of the house. We really liked it, and we often don't agree when it comes to houses. It would be so awesome to take advantage of the down market and get a rental property. Then, reality set in. Mr. K could afford the payments but has credit debt and no liquid savings. I could afford a 10% down payment but it would wipe out all my savings except half my emergency fund. Today the property was listed inactive in the MLS so it is probably sale pending after only a week on the market. We missed the boat.
On the bright side...
We both have good, stable jobs and I can pay the mortgage I have. If I raided every savings I have I could live almost a year without a job, longer if I sold my car. Financially, we're OK.
Thinking about that house was what motivated me to finally get off my duff and cancel that stupid whole life insurance. Mr. K was also motivated to do the same (we both fell prey to USPA&IRA at the same time), and he stopped payments to the stupid front load mutual fund USPA put him in, although he didn't cash out his current shares as they are almost at their lowest point ever (I cashed out a few years ago). Mr. K will now have about $400 extra per month and he plans to pay down his debt so he will have the financial freedom to take advantage of the next opportunity. We are more financially in sync at this moment than ever before, and it's great.
I was feeling really bummed until he said to me "Don't worry, there will be other opportunities and they will be just as good. Something else will come along." It will, and I should think about how I want to get ready for it.
Doublecheck your old books for poisons
1 day ago
Well the $15k home buying credit didn't survive the senate/house negotiation. I'm glad in a way cause I couldn't swing another house right now, we'd be too stretched. The downpayment is the issue for me, I couldn't come up with more than 10%. I keep my eye on the for sale listings, nothing has come up yet that I regret missing out on. Dont worry, more opportunities will come. Save the windfall for closing costs on your next house:)
ReplyDeleteI like Mr. K's thinking. I'm a true believer that things happen for a reason. What may seem like a bitter pill to swallow today may actually be a blessing in surprise in the long run. Cutting your losses now on the whole life insurance and the front load policies will only benefit you in the long run. Don't get discouraged and keep up the great job! (BTW, I'm jealous of your current house...)
ReplyDeleteI was going to ask if that picture was your actual house, because I LOVE it. If I did a drive by on your house and it sold before I could look at it, I would be bummed.
ReplyDeleteSo be glad you have a nice home, the value will increase. And once you two can better afford a 2nd home you will see more good deals. The plan was great, but the financial stress may have kept you up at night.
Christine
@Miss M - yes, I am going to save my windfall. I now feel more motivated than ever to sock money away like mad. That's a good result of this experience if nothing else. If I save extra money and don't buy, I'll still have the money.
ReplyDelete@Shtinkykat - yes, one of the main things that suppresses my regret at buying before the crash is that I have't seen a single home for sale anywhere near my price range that has as much charm as this one. You should see the living room from the inside!
@anon - yes, stress level would have gone up. I am counting my blessings in whatever form they come.
It's great motivation, isn't it? I keep kicking myself for making mistakes in the past that keep me from taking advantage of this market, but it's ok. It'd be dratted stressful to have bought and then found out about the layoffs in my office because I'll likely have to relocate.
ReplyDeleteThe photo of your house is absolutely gorgeous. It's so cute! Like what you hear about in books, but is so hard to find.
ReplyDeleteIf you're already close to struggling to pay off debt, then the joy of owning the new house probably wouldn't make up for the added stress. I know it's cliche, but for now, it seems like you have a lot to appreciate about your existing house.
Your story is a really good example for people who are just starting out though-if you save a lot you can take advantage of more opportunities. Sounds like houses in your area are pretty pricey too, so you wouldn't have as much of a chance to save as people around where I live.
Mr K is right - another opportunity will come up - one that is even better for you. I sympathize with you on being underwater on your mortgage. I'm the same way.
ReplyDelete