my old house

[cellio]

Tonight I found myself talking with friends about a house I used to own. When I sold it, things did not exactly go smoothly. Most of the interactions with the buyers were with a woman who was behaving pretty inappropriately; I was surprised when we got to the closing to find out that she was not actually a buyer; she was the buyer's girlfriend. Ok, whatever -- maybe her credit rating stinks, or maybe he's not sure how long-term the relationship is, or something. Not my problem so long as the check cleared, except that given that I shouldn't have had to put up with all the trouble she caused. (But at least one real-estate agent was falling down on the job there. Actually, I know that the buyer's agent was behaving inappropriately; I never found out whether my agent was too.)

Anyway, soon after the closing they began to repaint the exterior. They were doing the work themselves, and the process stalled partway through -- leaving a house that was half red (original) and half gold (yes gold, not yellow). And then it stayed that way for years. I wondered what had happened (spat?), but certainly wasn't going to ask. I've got to wonder about the neighbors, though; when I painted the house and it sat for a few months primed with a pink tint (not my idea), I got complaints.

After the conversation tonight I looked the house up on the county web site, and I was surprised to find that it was sold earlier this month. The new owner is a woman, but I find that for the life of me I cannot remember the name of the girlfriend so I have no idea if it's her or if they sold the parti-colored house to someone else. It'll be interesting to see if the paint job changes later this year.

I noticed that they also managed to sell it for $12k above the assessed value -- and before you Californians get the wrong idea and shrug, the price had five digits. I wonder how that happened. I assume there was a side deal where the seller paid off the buyers; realtors always try to drive up the transaction price so they get better commissions even if the sellers then end up paying off some inspection complaints.

The web has certainly made it easier to satisfy idle curiosity.

Comments

[magid.livejournal.com]

Wow. Five-digit house prices sound so... implausible to me, for anywhere not Nebraska, Wyoming, or somewhere equally far away from other people.

Lots of people don't understand money, btw. I've been told I shouldn't pay down my mortgage b/c then I'd have less of a mortgage deduction, for instance.

[cellio]

I've been told I shouldn't pay down my mortgage b/c then I'd have less of a mortgage deduction, for instance.

To address that question methodically (rather than instinctively), you have to be willing to do some projection and some math. Take the money you're going to use to pay down the mortgage. If you don't pay down the mortgage, where will you invest it instead? What rate of return do you expect on that investment? Compare that to the anticipated increase in mortgage interest and the incremental tax benefit. Then decide. The simple solution, whether it's "pay down the mortgage to lower costs" or "maintain the mortgage to maximize tax credits" is not meaningful in isolation; you have to look at the whole picture.

By the way, if you think you paid the mortgage down too far and you want those tax credits back, there's always the refinancing option. (Well, "always" is modified by current market conditions; you might not like the interest rate.) I was surprised when we refinanced a couple years ago that our stake was reset to 20%. This is, presumably, negotiable, and we'd only had the house for a few years and hadn't accumulated that much more equity so we didn't care, but it looks like refinancing is a way to change the amount of the mortgage and not just the interest rate. (IANAL (or realtor). This is based on the observation of a single data point. YMMV.)

[magid.livejournal.com]

*nod* about looking at the bigger picture. And it's true, there are places that might give me a better return on my investment, but the impression I had from these statements was that the person was taking it in isolation.

I have admitted to myself that my mortgage isn't quite the same as other financial investments; there's an emotional component, too. Also, this is the only major debt I have. So I know that for me, there's no such thing as paying down 'too much'; it's just that much closer to debt-free day. I might think differently when it's closer to paying off and there's lots of renovation-y stuff I want to do, but I suspect not.

[cellio]

There's definitely an emotional component. A house is the largest debt most of us ever carry, and, well, it's your home, not a stack of stock certificates or mutual-fund reports.

I believe that if we absolutely had to, Dani and I could redeem our mortgage. (That is, I think we've got as much saved elsewhere as remains on the mortgage.) So for us it comes down to the question of where that money will do the most good. When I was a single underpaid low-equity homeowner (you can get an FHA loan for 3% down), I focused much more on paying down the mortgage. (I generally made one extra payment per year, which the math said would reduce a 30-year mortgage to 21 years. Or maybe it was 19. I don't remember, and I didn't live there that long as it turned out.)

[magid.livejournal.com]

I know that if I absolutely had to, I could pay off the mortgage. It would be stupid to liquidate that many assets, though, especially when so many are in tax-sheltered accounts. For me, it's how fast I pay down the mortgage from the current cash flow; I overpay every month, but depending on other bills, it may be more or less overage.