Today I sent the final payment for my house to the mortgage company! Twenty years to the month after I first won the bid to this house in a FHA auction. It was purchased with a traditional 30 year FHA mortgage, though I put about 30% of the purchase price as down payment, and have been paying just a bit extra a month through the automatic payment system, and have given a few extra payments as well.
Most people would laugh, cry, or curse to hear the actual numbers involved. This house originally sold in 1983 for $55,000. I (and my mother) won the FHA auction for this house, which had been abandoned for 8 months, in October 1992 for $29,000. I had intended to pay $11,000 or more down, but considering the closing costs, and the need for new A/C we were told by a neighbor, I lowered my down payment to $8,000, making for $21,000 financed. (I was able to get the A/C working at first for modest repair costs.) The minimum Principal and Interest per month was under $200, with total payment typically $350 or so including taxes and insurance.
You could multiply these numbers by 10 or 20 for an average house in California in that time period.
But that's only one side of the story. I can hardly count the amount of money I've spent on repairs and improvements. And there was the original sweat equity, making the place livable by repainting everything. The siding in the front has all been replaced, all new A/C was installed in 2003 for $9000, the fence is all Fencecrete ($9,000 total cost), the roof, plus $5000 repairs on the chimney and gutters. Most of the plumbing fixtures have been replaced. The electrical system has been greatly expanded. And then in the last two years I've spent around $33,000 on the back yard, with Lyndhurst, Oakhurst, 12 new trees, and the sprinkler system. I've still got as much as $19,000 remaining debt from all those things, my most recent vacation, and other things, mostly financed on 0% credit offers (typically with 3% origination cost). My typical revolving debt in recent years has been around $10,000, and I'm not worried about $19,000 since even that is but a fraction of my annual income. One is supposed to feel badly about credit card type debt (as compared with serious debt to buy houses or cars) but the reality is that houses and cars can be taken away from you if you owe money on them, so it's best not to from a standpoint of personal security. If you can get the low rates, unsecured credit is just as good or better.
Zillow tells me my home could sell for $66,000 or thereabouts. The Zestimate was wavered around that same number +/-15% for 12 years. There hasn't been much appreciation or depreciation. You can't fall too far when you're already on bare dirt. And pigs don't fly either.
Well, forget, that, I figure it's worth much more to me, in the $200K - $300K range. I couldn't replace it for less than $200K, to get all the advantages that it has, and the effort in doing so would easily exceed $100K. A house just like this could be $1M in a seedy subdivision of Palo Alto. So I ain't selling for $66,000. And nobody can make me now that I've paid it off 100%.
It is a very nice place to live, just for living's sake. It's not awesome overall like homes some of my friends live in (though I think my new back yard is awesome) but it's very comfortable, very quiet, and yet I can play music as loud as I like for special reasons (good insulation, good separation, and no neighbor's windows face my house).
The downside by any calculation would be the neighborhood. This neigborhood has developed a somewhat justified reputation for gun violence. Now it's very very rare, even here, but it has happened. Our rate for murders in this neighborhood is somewhat above average for Texas, maybe twice the average rate. My corner of the neigborhood is occupied by very very nice people, but I'm only a few streets away from a street where a murder occurred last year, and a home burned out as well (it took awhile to get dismantled).
So the future of this neighborhood may be a question mark. I think, given that this early development is now surrounded by higher priced developments and an all new high school, I think it's on the way up in general. By and large most people who live here own their homes too. So I think there's hope and potential. A lot of people have a lot at stake here. Some people obviously care a lot. These homes were fairly well upgraded, certainly above the bottom level when built, with a mixture of wood, brick, stone, and stucco exteriors. Maintenance has been mixed, but there have been signs of improvement there as well.
And by now I'm pretty well committed to it. Barring miracles, or unknown unknowns, I'm staying here. I've also developed a philosophical attitude toward the danger. If not me, likely someone else would live here, perhaps a bunch of people or a family. In which case, the probability of someone being affected by violence would be higher. So I'm absorbing risk that would otherwise be greater for a larger number of people.
Anyway, given the layout of my house, with master bedroom in the back, and the quiet street I live on, and the good neighbors I'm surrounded by, I feel quite safe now.
This neigborhood is also special because it's where my lady friend has a home also, about half a mile away. We've made the walk between our homes sometimes, it's not a scary walk, though she has become concerned about 3 of her neighbors who rent and do bad things like burning weeds in their back yard.
We talk about having her move over here. We have talked about that for 4 years now, and she promoted and remains very receptive to the idea. It will likely happen in the next few years, I believe. But I have much house work yet to do to make that possible: moving lots of junk out to Lyndhurst while discarding some of it. I've now moved the "second-bedroom-to-be-ready-by" date to January 1. We'll see.
Most people would laugh, cry, or curse to hear the actual numbers involved. This house originally sold in 1983 for $55,000. I (and my mother) won the FHA auction for this house, which had been abandoned for 8 months, in October 1992 for $29,000. I had intended to pay $11,000 or more down, but considering the closing costs, and the need for new A/C we were told by a neighbor, I lowered my down payment to $8,000, making for $21,000 financed. (I was able to get the A/C working at first for modest repair costs.) The minimum Principal and Interest per month was under $200, with total payment typically $350 or so including taxes and insurance.
You could multiply these numbers by 10 or 20 for an average house in California in that time period.
But that's only one side of the story. I can hardly count the amount of money I've spent on repairs and improvements. And there was the original sweat equity, making the place livable by repainting everything. The siding in the front has all been replaced, all new A/C was installed in 2003 for $9000, the fence is all Fencecrete ($9,000 total cost), the roof, plus $5000 repairs on the chimney and gutters. Most of the plumbing fixtures have been replaced. The electrical system has been greatly expanded. And then in the last two years I've spent around $33,000 on the back yard, with Lyndhurst, Oakhurst, 12 new trees, and the sprinkler system. I've still got as much as $19,000 remaining debt from all those things, my most recent vacation, and other things, mostly financed on 0% credit offers (typically with 3% origination cost). My typical revolving debt in recent years has been around $10,000, and I'm not worried about $19,000 since even that is but a fraction of my annual income. One is supposed to feel badly about credit card type debt (as compared with serious debt to buy houses or cars) but the reality is that houses and cars can be taken away from you if you owe money on them, so it's best not to from a standpoint of personal security. If you can get the low rates, unsecured credit is just as good or better.
Zillow tells me my home could sell for $66,000 or thereabouts. The Zestimate was wavered around that same number +/-15% for 12 years. There hasn't been much appreciation or depreciation. You can't fall too far when you're already on bare dirt. And pigs don't fly either.
Well, forget, that, I figure it's worth much more to me, in the $200K - $300K range. I couldn't replace it for less than $200K, to get all the advantages that it has, and the effort in doing so would easily exceed $100K. A house just like this could be $1M in a seedy subdivision of Palo Alto. So I ain't selling for $66,000. And nobody can make me now that I've paid it off 100%.
It is a very nice place to live, just for living's sake. It's not awesome overall like homes some of my friends live in (though I think my new back yard is awesome) but it's very comfortable, very quiet, and yet I can play music as loud as I like for special reasons (good insulation, good separation, and no neighbor's windows face my house).
The downside by any calculation would be the neighborhood. This neigborhood has developed a somewhat justified reputation for gun violence. Now it's very very rare, even here, but it has happened. Our rate for murders in this neighborhood is somewhat above average for Texas, maybe twice the average rate. My corner of the neigborhood is occupied by very very nice people, but I'm only a few streets away from a street where a murder occurred last year, and a home burned out as well (it took awhile to get dismantled).
So the future of this neighborhood may be a question mark. I think, given that this early development is now surrounded by higher priced developments and an all new high school, I think it's on the way up in general. By and large most people who live here own their homes too. So I think there's hope and potential. A lot of people have a lot at stake here. Some people obviously care a lot. These homes were fairly well upgraded, certainly above the bottom level when built, with a mixture of wood, brick, stone, and stucco exteriors. Maintenance has been mixed, but there have been signs of improvement there as well.
And by now I'm pretty well committed to it. Barring miracles, or unknown unknowns, I'm staying here. I've also developed a philosophical attitude toward the danger. If not me, likely someone else would live here, perhaps a bunch of people or a family. In which case, the probability of someone being affected by violence would be higher. So I'm absorbing risk that would otherwise be greater for a larger number of people.
Anyway, given the layout of my house, with master bedroom in the back, and the quiet street I live on, and the good neighbors I'm surrounded by, I feel quite safe now.
This neigborhood is also special because it's where my lady friend has a home also, about half a mile away. We've made the walk between our homes sometimes, it's not a scary walk, though she has become concerned about 3 of her neighbors who rent and do bad things like burning weeds in their back yard.
We talk about having her move over here. We have talked about that for 4 years now, and she promoted and remains very receptive to the idea. It will likely happen in the next few years, I believe. But I have much house work yet to do to make that possible: moving lots of junk out to Lyndhurst while discarding some of it. I've now moved the "second-bedroom-to-be-ready-by" date to January 1. We'll see.
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