Grateful

One thing I'm very grateful for, every morning as I wake up and hear the news-radio talking about more bank failures or buyouts, is that I don't have a mortgage.

That's right. I own my house, and not "own" in the sense that some bank has part-ownership.

I kind of hesitate to talk much about this because I know some people would regard it as me "trumpeting" my "privileged" status. And it's kind of true...I have enjoyed, and do enjoy, a certain amount of privilege, largely as a result of things my father has done.

My father, when he was working, was a college professor and minor administrator. I will observe that he never made a huge salary, not by administrative standards - he never approached $100,000 in a year.

But my father is frugal. And he's incredibly smart about investing. In fact, now that he's retired, I have him managing my stock portfolio for me because he does a far better job than I could ever do. (And may he be able to manage it for a good many more years for me).

He taught me well. One of his early lessons was to never go into debt for things other than a house, and possibly an education...he would argue that there were ways around going into debt for other things. True, we didn't have a lot of the things my friends had - we didn't get cable for a long time, we didn't have a VCR until I was in college, I think - but we were comfortable enough. We took our vacations in National Parks (inexpensive, and in the long run, I think more interesting than going and lying on a beach somewhere or spending megabucks in a theme park.) We did "cheap" things for fun - went hiking, went to the dollar-a-person revival movie house near the campus where he taught (I saw most of the "classic" Disney movies there; I think they did a Saturday "family" matinee with a kid-friendly movie).

So anyway. Those values kind of got passed down to me.

When I started grad school for the second time - when I was going to the campus close to my parents and living with them - I asked my dad if he wanted me to pay rent. After all, I was over 21, "should" have been out of the house on my own. He said no, not as long as I made an effort to put some money away each month for future needs.

So I did. I didn't make much as a TA but in the time it took to complete my Ph.D., I managed to save up a little over $10,000.

That came in handy later on.

Also, my father's frugality and concern for his family helped me in another way I will never be able to repay him for. When his mother died, the resort his parents had owned was sold. Apparently it had appreciated a good bit over the years, and after the large estate tax was paid, there was a goodly amount of money left over, which my dad and his brothers split. His brothers spent their portion on things like boats and vacation homes. My dad told my brother and me - I was in junior high at the time and my brother was even younger - that he was going to invest the money, and if it did well, it would pay for our college educations.

Well, this was the early 80s. You remember the 80s? My dad invested the money very wisely and it did very well.

So thanks to my dad, I had no college loans to pay back. Which I realize now is a big huge deal and something I can never adequately thank him for.

Even more than that...there was money left over in my account when I was done with college (well, the fact that I finished undergrad in three years, and then after that was a TA or an RA every semester, which carried with it a tuition waiver and enough of a stipend that I didn't have to touch that money, helped).

So fast forward to 2001. When I was thinking about buying a house. My father reminded me I had about $30K left in that stock account. And I knew I had my little nest-egg from grad school. And it turns out, parents can make a nice tax-free monetary gift (up to a certain amount) to their kids. And my dad had just taken his second retirement, so he had the money.

He told me that the bigger a down payment I made, the better.

He didn't talk to me about fixed-rate versus ARMs, but I kind of think if I had gone very far down the path of trying towards a mortgage, I would have figured out that if I could have gotten a fixed rate, that would have been best.

But anyway. The area where I live was (and still is, though it's a bit better now) somewhat economically depressed. The "housing boom" never really hit here. And the house I found and fell in love with was an older house - a small, circa 1940s house in a quiet neighborhood midway between downtown and the University.

I spend much of the summer negotiating with the seller - a man a few years older than I am, who was selling the house on behalf of his mother, who was having to go into an "assisted living" facility.

I hadn't really thought about mortgages; I was just holding out hope that the fact that I was a college professor (with a job unlikely to go away) would be enough to get me one.

Then, my dad brought up the option of paying cash, if the seller and I could negotiate a price that would work.

When I mentioned that to the seller, he was more willing to negotiate. I wound up getting the house for something a little less than $60K.

I know that sounds unbelievable to a lot of people - especially those on the coast - but this is a small, older house. It has one bathroom and two bedrooms - not exactly the kind of place most people were aspiring to. But I live alone, so the one bathroom makes no difference.

Also, there had been some "deferred maintenance" on the house - it needed a little work, some of which I could do myself, some of which I was able to hire someone to do.

So we worked out the negotiation, and I handed over my big cashier's check, and got the keys.

The funny thing is all along, I was wondering if I had done the right thing by not taking out a mortgage. One of my colleagues (who was buying a house at the same time) kept telling me about how a mortgage would allow me to "retain the use of that money" and that I could probably negotiate a mortgage with "not very big payments" (yeah, but how much of that would be interest?)

But now I'm SO GLAD I did it this way. I own my house. I don't have to worry about my mortgage being sold to someone else. (The house my parents own...they had a mortgage on it but my dad sold some stock to pay it off about 15 years ago because the mortgage was sold to a different financial institution, and, to put it bluntly, they were a-holes...rude on the phone, sent statements late, just generally were not good businesspeople. So my dad paid off the mortgage to avoid having to deal with them any more).

I really do wish everyone who wanted a home could afford one. But the whole idea that "bad mortgages" were written - ones that the bank should have known the people couldn't afford - makes me kind of sick. (I think, honestly, the banks are probably more to blame than the people. I knew nothing at all about mortgages - other than that you need to pay them, and they last 15 or 30 years, and a lot of what you're paying is actually interest - before I bought this house, and before the whole mortgage mess started up. And I'm a reasonably smart and savvy person, it's just I never NEEDED to know about mortgages before, having always lived with my parents or in apartments. So I place the blame on the loan officers who encouraged people to go for "more house" than they really could afford. And I blame them for perhaps being too Pollyannaish about the adjustable-rate mortgages: I know people with them who never believed that they were going to get hit so hard by the rate being "adjusted." Yes, I know, it was a gamble they took - but I don't remember ever hearing anyone suggesting it would be a losing bet. I know people with ARMs who are scrambling to cover payments now, they never imagined this would happen, because the bank officers seemed to assume that conditions would remain ever the same.)