The taxman drove us out of our home
My wife and I went looking for a piece of land big enough for a house and our fishing business. We had no outstanding debt. We ran our finances and business on a cash basis.
When we did find what we wanted we went to the credit union where we kept our accounts. Much to our surprise we were turned down on the basis that we had no credit history.
I argued that no credit history meant we maintained a family of five with food clothing and housing plus a profitable fishing business without debt. All our assets were owned free and clear. This made no difference. We did not have a credit history. When my wife demonstrated that our assets were greater than the size of the loan we needed, the bank agreed to make the loan.
We wanted a ten-year loan to start our project up with general contractors couple of years back. The bank would not hear of it. We then negotiated for a fifteen year note.
Thirty-year mortgage Plans
My wife and I had studied how much a home would cost with a ten, fifteen, twenty and thirty year mortgage. We came to the conclusion that a thirty-year mortgage was legalized plunder.
With a thirty-year mortgage the total cost of our house would be $328,320. With a fifteen-year mortgage the cost of the home would be $246,420, a saving of $82,900.
The monthly payment on the fifteen-year mortgage would be $457.00 more per month and the mortgage would be paid off in half the time.
With a thirty-year mortgage I would have been trapped in the bursting of the housing bubble. Instead my wife and I enjoy sitting in our four-bedroom house with the comfort of it being paid off.
So we decided on fifteen-year mortgage
When our home was completed it was valued at $400,000. The housing bubble burst and the value of homes depreciated by half, putting many homes underwater.
Because our home is within hearing of the breaking seas on the beach it has held its value. Those with an ocean view are still worth as much as when the housing crash occurred and in fact some are worth even more.
Of course not everybody can afford to build with an ocean view. But everybody can get a fifteen-year mortgage if they have been religious, like my wife, protecting our credit rating.
One final tip, do not co-sign for your children’s major purchases. If they can’t establish a decent credit rating then how are they going to meet the terms of their mortgage. Oh no! You co-signed it’s your mortgage.