Above: the writer’s Westport, Connecticut home.
Fifteen forty eight sixty. Fifteen forty eight sixty. FIFTEEN FORTY EIGHT SIXTY!
That’s the number I will never forget, even though its importance ended over 15 years ago. $1,548.60. Have you guessed what it is? If you’re a homeowner you probably have.
It’s the mortgage payment I made every month until our Westport, Connecticut house was paid off. I was happy to pay it, happier when it was over, and thrilled to have been able to realize the American Dream of homeownership. Now we’re in the same house for almost 30 years with no mortgage or rent, and when we sell it we’ll likely double the $315,000 we paid.
We came this close to walking away from it, though. It took two amazing REALTORSⓡ to make it happen.
The house was for sale at $320k, and was perfect for us. It had been on the market at that price six months earlier, and the very first person to see it offered list. The seller said no, figuring he’d priced it too low, and the prospective buyer moved on. Bad decision. No one offered more, or even $320k, after that. It went off sale, then was listed again for $320k. We came along and offered $310k, figuring to split the difference and pay $315k. The seller said no, that he’d been offered $320k once and would not take less. Expecting an acceptance, we were turned off, and asked our REALTORⓡ to show us other homes.
We got lucky. Our agent and the listing agent decided it was dumb to let the sale die. They split $5,000 less in commissions and we got the house. So instead of all losers, they created a scenario of all winners, proving why REALTORSⓡ are invaluable.
That was then, and this is now. I’ve only been covering the residential real estate industry full-time for a little over a year, after having occasionally written about it as a freelancer. So it’s a little perplexing to be hearing about how mortgage rates are considered by most to be insanely high at 7.5%. When we bought our house we locked into a 30-year fixed rate of 8.15%. It was for $200,000, as my wife and I had saved enough for a $115,000 down payment. I didn’t give the rate a second thought. It was what it was.
I remember learning that the rule of thumb was if you could refinance to a rate 1% lower, then it was worth paying mortgage and legal fees all over again. About 18 months after closing we did so. We got a rate of 6.75%, for a 15-year mortgage. I was delighted! Today that rate is thought to be horrid by most. I considered another 30-year term but the numbers were not drastically different, so we went with the 15, which was a great decision, saving us many thousands of dollars over time.
I suppose if when we bought our house the rates had doubled from two years earlier it would have been annoying, but would we have backed out? Not a chance! We found the house we loved and have never looked back. We truly married the house and dated the rate. We probably could have refinanced again over the course of 15 years, as I recall rates dropped further, but not significantly.
Of course it’s easier to write about mortgage-rate anxiety than to live it. REALTORSⓡ could use examples like mine when calming clients. We accepted the rate, started building equity and most of all, have loved living in the house since then. We raised our son here, love the town, made friends with neighbors, etc. What if we had passed on buying, hoping for rates to drop? Would we have found the perfect house like we did with this one? Who knows?
And what if rates instead continued rising when we were house hunting way back when? We would have probably been stuck for another year or two, or more, in a cramped, dumpy one-bedroom Manhattan apartment, paying rent of $1,400 (28 years ago) or more that built up the landlord’s equity, not ours.
One of my favorite lines from the TV show Succession is, “There’s a time to accumulate capital and a time to spend it.” That’s what you should stress to your clients, who have clearly saved their money: “When you find the perfect house…. BUY IT!”
