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Our House and Mortgage

I just realized that I have not written about our house or our mortgage in a while.  I also know there are quite a few new readers (hello!), so I thought I’d touch base with everyone again.

Our House – The Beginning

Mr. BFS and I bought our home in 2007.  We had been married for 2 years and were 23 and 24 years old respectively (yep, I’m the slightly older woman, lol).  The whole process was stressful, but in the end, we found a fantastic foreclosure deal on a wonderfully built house.  4 years later, we’re still loving it.

Here are our House Details:

  • Built in 2004
  • 2 Stories – Brick and Hardy Plank
  • Attached 2 Car Garage
  • 1750 square feet
  • 3 bedrooms
  • 2 1/2 baths
  • The bedrooms and two full baths are upstairs
  • The kitchen, living room, dining room, and half bath are downstairs (great for our potlucks!)
  • Covered back patio
  • Small front yard and smaller back yard

It was listed by the bank at $119,500.  After nearly 6 weeks of very slow negotiations (a downside to buying a foreclosure), we settled at $114,000, had the place inspected, and closed the deal towards the end of April 2007. Fast forward to now and we currently have built up some equity that we would like to borrow against to do some home improvements. The best home equity loan rates are looking really good right now.

Here are our Mortgage Details:

  • We forked over a 20% downpayment – $22,800
  • We also paid all of the silly closing fees – about $3000
  • The mortgage came to $91,200
  • 5.375% rate
  • 15 year term
  • We did not escrow – you can see in our monthly budget that I put aside money every month for our property taxes, which come to about $2300 a year right now

This means our monthly payment is a few cents short of $740

.  We have overpaid $160 since the first ever payment after I figured out how much we could save on interest, so we have always been on track to pay our house off in 11.33 years total.  That’s also why our mortgage payment shows $900 in our monthly budget.

I’m impatient, so I bet we’ll have the mortgage completely out of the way in 10 years total or less.  Hopefully our house will be all ours by my 34th birthday – 36th at the absolute latest.  🙂

Our Mortgage Update

As of right now, nothing has changed.  We have opened a 2nd Roth IRA instead of making additional mortgage principal payments, so we are still on the 11.33 year payoff track.  If my blogging income stays above $2500 a month consistently, I’ll be working from home and anything over that $2500 will be squirreled away into our investment account.

That account may very well grow fast enough to pay off our mortgage even more quickly than I expected.  But barring that, we’ll still have a paid off house by 2018.

Why I Pay Off Our Mortgage Early

I know some of you may disagree with paying down our home early.  I do understand that 5.375% isn’t a bad rate and we could invest elsewhere for better returns. Refinance home loan rates are looking tempting right now however I simply rather take the guaranteed return.

Since my husband and I are better off taking the standard deduction than itemizing our mortgage interest payments (less than $4000 a year), we never see any of the tax benefits so many people like to hold on to.

We also do invest in stocks, 2 Roth IRA’s, and a 401(k), so it isn’t like we aren’t covering our bases anyway.

I simply do not like owing anybody money. When I first set out to learn how to get into real estate investing I wasn’t expecting all this stress.  As I’ve said elsewhere, debt makes me feel itchy.  Like unfinished business.  I personally will be beyond happy when our last payment is sent in and I will know that we can do whatever we want with that extra $900 a month!!!

Do you own a home?  If so, how is your mortgage going?  If not, what do you think about it all?  What do you think of paying off a mortgage early?

38 thoughts on “Our House and Mortgage”

  1. Bogey

    We actually have a 30 year mortgage at 4.50%. No plans to prepay the loan at this point. We have much better uses for our cash at this point, and it will be pretty easy to get the loan paid off before we retire, so I am not worried about it. Right now our extra cash is going into: saving 18% and 14% in each of our 401(k)’s (my wife and I), fully funding 2 Roth’s, investing in income producing real estate, as well as spending money on fun activities that we want to enjoy today.

  2. Molly On Money

    We have a 20yr mortgage (we’re on year 8) @ 5.25%. I too want to pay off our mortgage in the next few years. We are getting closer to having to take the standard deduction so I figure we might as well pay it off! That’s part of it. The other is more emotional- I just don’t want to owe the bank anything right now. I’d rather that mortgage payment going to our retirement.
    If my husband hadn’t lost his job a month ago our plan was to have it paid off in 2.5yrs. We aren’t giving up just putting that goal on hold.

  3. Nicole

    That’s impressive that you took the 15 year mortgage right away.

    Here’s our latest mortgage update: https://nicoleandmaggie.wordpress.com/2011/04/01/mortgage-update-2/

    We’ve refinanced twice. Started at 30 years 6.5%, latest refi was 20 years at 4.75%. The first refinance we wanted to do 15 years, but the interest rate was identical. The second refi, they wouldn’t let us go 15 years with a no-cost refinance, only 20. We currently have 11.42 years remaining. We’re on track to pay it off in 4 years if we keep on the same prepayment schedule, but we may not depending on what happens with interest rates, our jobs, childbearing etc.

  4. JT McGee

    You’re one of the few bloggers that I can relate to. When I see $300k mortgages for 1500-2000 sq ft homes I have to do a double take. The midwest is the best! Newer homes are <$70 per sqft in nice areas. Who wouldn't want a deal like that?

  5. Ravi Gupta

    I think it’s great that you guys are making extra payments on your mortage. I happen to feel the same way about them in that it doesn’t feel right to have debt.
    Coming from Florida I wish we had your home prices. I guess we’ll have to look all over the market to find something like that.

    -Ravi Gupta

  6. Little House

    I think for $900 a month, it’s a smart bet to pay off your mortgage early. It sounds like you got a smokin’ deal on your house and at perfect time.

  7. Crystal @ BFS

    @Bogey, sounds like we’re spending our money similarly except that I’m paying off my mortgage early while you are investing in real estate. 🙂 Our extra money is also going to savings, my 401(k), hubby’s pension, stocks through our Scottrade account, fully funding 2 Roth IRA’s, and vacations and hobbies. 🙂

    @Molly, the first thing we would do if one of us lost our job would be to stop overpaying the mortgage. I bet you won’t have to be on hold for long – based on what I’ve heard about your husband from your posts and guest posts, he’s driven and will find something fast. 🙂

    @Nicole, oh yes, plans change if life gets in the way, lol. All plans I ever talk about come with the unwritten disclaimer (sometimes written), “as long as everything stays like it is now”. 🙂

    @JT, I feel for anybody buying 1000-1500 square feet for $250,000 or more. It just seems so odd since I’m used to the pricing around here…of course, I also would have a hard time finding a job I’m qualified for that pays 6 figures…I guess it is a trade off.

    @Ravi, yep, higher prices in Florida, but of course, you get the trade off of being able to live in Florida. 🙂

    @Little House, we got very lucky in 2007, but we could have gotten an even better deal if we waited 1-3 years. The guys down the street from us bought their 2500 square foot 2 story (similar to ours but with more bedrooms and a separated living room and dining room) for $120,000!

  8. Dave @ Money In The 20s

    A house is in the near future for me, so I love reading anything related to mortgages. I think you are doing the right thing with your mortgage. I would love to be in your situation and potentially fully own a home in my mid 30s!

  9. krantcents

    I have a 15 year mortgage at 5% that has 7 years to go. I increased my payment to pay it off to coincide with my retirement in 6 years.

  10. Dr Dean

    Sounds like you are doing a great job. It is frustrating when you try to get a shorter mortgage and they are unavailable. I wanted a 10 year with a recent refi and they wouldn’t price below 15…

    Are you planning on staying in your home for a while?

  11. Squirrelers

    You guys are totally on the right track in my view. It’s hard to find fault with your approach here, so I won’t 🙂

    By the way, I’m a bit envious of the Houston affordability factor…I couldn’t imagine getting a 2004-built 3br home in the Chicago area for that price. That’s a big plus for you guys too!

  12. Crystal @ BFS

    @Dave, I’m glad you liked the post! I actually wrote it because someone mentioned they wanted to hear more about housing and mortgages in the Get to Know Crystal post last week, lol. 🙂

    @krantcents, that’s just good thinking! I hope you enjoy your next retirement more than you liked your first one!

    @Dr. Dean, we are planning to stay until at least our house is paid off. I personally want to stay there until we either must move for a job or because our knees hurt too much taking the stairs to the bedroom, lol. I hate moving. I bet I can convince hubby to stay for another 10 years minimum…

    @Squirrelers, don’t get too jealous. I bet you make more than $35,500 a year (office work) or $47,500 a year (school librarian)…most of my readers over 30 seem to own way more expensive houses but make double or more than what hubby and I bring in. 🙂

  13. Jonathan

    Keep in mind that even when you pay off your mortgage, you’ll still have that $2,300 a year (or more, by then) tax bill to contend with – so still a $200/month home. Not too bad though!

  14. Crystal @ BFS

    @Jonathan, it’s hard to forget. 🙂 Since we already set it aside separately though ($300 a month just to be on the safe side), it’ll be easy to simply continue that once our house is paid off too.

  15. Evan

    It is so hard to understand for me to even comprehend a home at $115,000. My home, considered cheap in my area because of gov’t subsidies and rebates (I won a lottery to even have the ability to buy it) was $250K for a 1400 2 bedroom 1 & 1/2 bath town house…my taxes alone are $4500/yr and my maintenance is another $3,600/yr lol my taxes and maint are almost as much as your mortgage.

    My next home won’t be amazing by any stretch of the imagination but will be over $400k…OUCH.

  16. Crystal @ BFS

    @Evan, yep, you must live in an area that would make me cry. It’s all about percentage of income though, right? Your house may be just as affordable to you and your salary as my home is for ours…

    I do know we got lucky when we bought a home in an unfinished neighborhood that doesn’t have a home owner’s association. The yards must be kept up through peer pressure but there are no annual dues. I love that!

    We got lucky on our taxes too temporarily – we are considered to be living in a high foreclosure area, so they valued our house $10,000-$20,000 lower to entice people to move in. They haven’t seemed to notice that all of the houses have been sold and are being lived in yet…our taxes will most probably be around $4000 annually once the county catches on (we have 3.5%-4% property and school taxes)…

  17. MikeS

    I live in the high housing cost East Coast. The house my wife and I just put an offer on is just over 2,500 sq ft, 3 bedrooms, 2 full baths, 2 half baths, 2 car attached garage with a deck and pool, built in 1999. The cost is about $335,000 and real estate taxes will be about $6,000 per year.

    I’ve already worked out how I can pay it off in 15 years, but I’m taking out a 30-year mortgage. My wife made the comment the other day when signing some paperwork for the mortgage application, “Were going to pay how much over 30-years?” That’s when I informed her of the total cost over 15-years. Her response, “Now I know why you want to pay it off sooner.”

  18. Linda

    I basically started over at 42 when I got divorced and decided to keep the house. I started out about two years ago with a standard 30-year mortgage but am determined to pay it off by the time I reach standard retirement age. I’ve refinanced once to drop the rate, but not to adjust the length of the mortgage. I’m paying enough extra every month to pay it off at 63. I could accelerate payments even more if I did not save for other things I want in life like vacations and a new car (maybe in about a year or two). But I’m not even sure I will stay in this house through retirement. Moving is a big pain, but a smaller house with an even smaller payment would be nice. This is not a seller’s market, though, so I plan on staying put for at least another 2-3 years. One thing I’ve learned in recent years, though, is that you just can’t predict what life will throw at you. So I have a plan, but I’m not wedded to it.

  19. Sunil from The Extra Money Blog

    that sounds like great progress Crystal. I am with you, I don’t like owing anyone anything. a big part of to have or not have mortgage debt is personal preference / psychology, which many fail to acknowledge. it’s not just about dollars and cents sometimes

  20. First Gen AMerican

    I had 2 mortgages during the crash of 2008 (mine and my mom’s) and that was enough to scare me silly to pay ours off completely. Like you, I didn’t do it at the expense of retirement savings. My 15 year mortgage was just over $900/month and it’s great having that extra cash flow. I think ours took 11 years to pay off and my original goal was 7.

  21. I am soooo proud of all of you (Crystal and all commenters). If the rest of the country had been as fiscally responsible as you are, we wouldn’t be in the housing mess we are struggling through.

    We didn’t own a home until we were in our early thirties. In 1979 we bought a starter (aka dump) ranch for $25K. Ten years later we moved up (and to a decent neighborhood) for 125K at 10.25% interest! We paid that one off 2 years into it and still live there. The money that would have gone to the mortgage company went instead to the universities to pay off kids college.

    It makes sense to pay off your mortgage if you plan to stay in the house, can’t get better interest rates elsewhere and don’t absolutely need the cash.

  22. Ashley @ Money Talks

    We also pay extra. I think we are on track to have it paid off in 2025. Which will have been 21 years of payments. It used to annoy me when people would say I was doing the wrong thing. It’s MY money right? It will be a happy day when we don’t have a mortgage anymore!

  23. Crystal @ BFS

    @MikeS, wow, the numbers just get staggering the higher the price of the home! Good luck!

    @Linda, “So I have a plan, but I’m not wedded to it.” Well said!

    @Sunil, yep, I am a low risk personality…

    @First Gen, I’d be super happy with 11 years and ecstatic at 10 years or less!

    @Marie, thanks for the support!

    @Ashley, it will be a great feeling to be mortgage free! Good luck!

  24. Money Reasons

    Awesome! You and your husband sound like what my wife and I were like 11 years ago 🙂

    You are making all the right moves in my book! Putting a little extra on the house, but also investing the money in your Roths to take advantage of the big dip caused by the “Great Recession”, too sweet!

    Keep up the great work, to me it appears you are doing great!!!

  25. lana

    We too are paying off the house ASAP. Hopefully next year we will pay it off. It has been 2 years 8 months that we have lived here and with a depressed market both for jobs and housing I don’t want to be anxious about finances.

    I want to have a lifestyle without any sort of financial contractual obligations. We are almost there.

  26. Crystal @ BFS

    @Lana, wow, paying it off in less than 4 years is amazing! Good luck!

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