First-time home buyers: how did you feel about getting a mortgage?

An option for me to buy a house has come up very suddenly and it seemed like a good idea at first - but I look at a mortgage and think “that’s 15 years I’ll spend paying back, at absolute minimum. Probably more like 25 years” - how can I possibly plan that far in advance?

So, how did you feel about getting a mortgage and seeing such a serious commitment stretch so far into the future? I’m mainly talking about the emotional side of things rather than financial

Bizarroland,
Bizarroland avatar

I purchased a home for $485,000, with 2.74% interest rate and a 0.25% PMI through the native American home loan plan back in 2020.

With taxes and everything my monthly payments are $2,600 to the penny.

If I wanted to rent a two bedroom apartment, I would have to pay $2,100 a month in my area, if I could even find one that cheap.

So for an extra $500 a month, I get several thousand dollars a year off of my taxes, I get easily three times the space, and I get to do with my property anything that I want to do.

And, assuming nothing crazy happens in another 20 years or so it will be mine and all I'll have to do is pay taxes.

Assuming nothing else goes wrong, if I decide to move in another four or five years, I will be able to recoup a huge percentage of the money that I have spent on this home, if not actually turn a profit off of it whereas if I had only paid rent during that time period all I could do would be to leave with what I happen to have on me.

A mortgage is a huge responsibility. Owning a home is a huge responsibility. But it's also an opportunity to build up my finances and to establish myself.

Since owning a home for the first time since I went to college my net worth is greater than $0.

One thing to note is that if it is at all possible for you, as soon as you get your mortgage pay one additional mortgage note.

That $2,000-$4,000, whatever will go directly to the principal and will save you some multiplier of itself in interest fees and knock months if not years off of your total mortgage term.

And if you can, pay an extra $100 a month or whatever you can fit into your budget alongside your mortgage premium.

Assuming you actually pay off your mortgage over the full term any extra money that you pay down on the principal will pay themselves back to you in decrease of the total purchase price of your home.

If you have a legitimate plan to move out within 3 to 8 years and to sell, then maybe you don't have to worry about that so much but if there is even a chance in hell that this is your forever home then it's well worth it to spend that money.

RBWells,

I remembered my mom saying that by the end of the 30 year term the mortgage was her smallest housing expense, lower than the electric bill.

So yes, scary, but just remember that principal and interest part is going to seem smaller and smaller since it doesn’t grow with inflation.

preppietechie,
@preppietechie@midwest.social avatar

It’s weird. The numbers are so big and the dates are so far out there that none of it feels real. The fact that (assuming you fit their magic profile) some bank will accept your signature in return for hundreds of thousands of dollars is stranger still. I honestly wish we lived in a society where this sort of thing was NOT the norm. But if you live in the US, home ownership is one of the few mechanisms in place for us commoners to generate and/or pass on generational wealth (assuming that the whole system doesn’t collapse like the house of cards it probably is while you own the house).

Dearth,

It’s cheaper then rent. It raises my credit score. And i finally have ultimate authority on what i can do to decorate and maintain my home.

Honestly after over a decade of belonging I’d never be able to own my own place it was a huge relief to get a mortgage

brygphilomena,

It was scary. But my mortgage itself isnt too bad. The amortization schedule was scarier, as the first several years you’re almost paying just interest. And you get to see just how much it costs over the total life of the loan.

But I like my house, I feel a sense of pride and accomplishment. I can enjoy doing the fixes myself, and cry when things are so expensive to repair. There are so many things I want to do, but can’t afford to at the moment.

I am really enjoying getting my yard they way I want. And it’s even nicer to have a place that my girlfriend and her daughter can move in.

The house has appreciated 10% in the last two years. And as inflation keeps happening, it devalues the loan. The money I owe is worth less and less and the property I own is worth more and more. At least in general, that’s how it should work.

Property taxes are pricey, but I’m happy with paying them for what I get in the city and neighborhood I’m in.

Thorny_Insight,

It was a no-brainer for me. I’ve got to live somewhere in either case so instead of paying rent I could just aswell use that money to pay off my mortage (in reality I’m paying less).

In general my attitude towards loans is that if you can’t pay cash then you can’t afford it but house is obviously an exception as no one has that kind of money saved up.

Haven’t regreted a day.

ABCDE,

I went about it a different way: bought the land, saved up (while on cheap rent), and then built a place. Obviously this depends on where you are, but it’s not impossible. The UK is notoriously difficult to get things done like this due to regulations and the slow movement of bureaucracy, I’ve heard NZ is the same, but… it’s definitely something I’m happy I did.

shortwavesurfer, (edited )

I will say I don’t really know about the emotional part so I will go into the financial and say that your country’s currency will depreciate as time moves on. Therefore, you can either get a fixed rate mortgage now and convert it to a lower fixed rate mortgage later or get a variable rate mortgage now and convert it to a fixed rate later when rates decrease again. By doing this you lock in your price and the only thing that will change it is either in increase in taxes or insurance and even that won’t increase it that much. So you have a very good idea of what your bill will be and you are shorting your country’s fiat currency by buying something of value now and paying for it with depreciating currency over time.

Edit: As one buyer to another, I will say, watch out for electricity prices, though, because environmentally changing a 900-square-foot apartment or a 900-square-foot house are two totally different animals. I am not sure whether it’s because all the other units in the building are doing roughly the same thing so the temperature change you have to make is less or if my landlords were subsidizing electricity but it was way cheaper to run electricity in an apartment than in a house. Like my electricity went up from an average of $30 at my apartments to an average of $120 at my house. As I said, my guess is that since everybody else in your building of apartments is wanting to keep their apartments cool or warm as well, this changes how much you personally spend to warm or cool your part of the building.

Edit 2: Another thought is that perhaps it’s the attic in my house that caused a lot of that increase because yes my house is technically like a thousand square feet but that is the floor that you can live on not including the attic which would add more to that total if it were included

empireOfLove2, (edited )
@empireOfLove2@lemmy.dbzer0.com avatar

Alternative: you can spend that same 15-25 years paying roughly the same monthly amount in rent at various places, and have exactly zero equity or assets to show for it at the end of the period. Zero zilch nada, the money is burned and gone forever.

Frame it in that sense and it’s a no brainer.

In the current market though either try to get a variable rate mortgage or be prepared to refinance it in a few years if/when interest rates cool down. the current rates suuuuuck.

ShepherdPie,

You’ll likely wind up paying significantly more in rent. When we bought our house in 2020, our mortgage was around $300 more than we were paying in rent. I think within 6 months or so, average rental prices for a similar home were significantly higher. By this point, even an apartment costs more to rent than our mortgage (PITI).

empireOfLove2,
@empireOfLove2@lemmy.dbzer0.com avatar

You always pay more for rent- because mortgage payments aren’t just lost to the void, they become equity value that you can then get back out by selling later, less cost of interest. The “real” cost of your house payment in a net-value sense is only the interest, actually.

13esq,

In the UK, rent is substantially more than mortgage repayments.

Landlords will cry about their maintenance costs but I’ve never seen any maintenance that wasn’t the cheapest fix possible by a cowboy family friend.

Nibodhika,

That’s curious, both in Ireland and Spain mortgages are much lower than rent, it’s literally stupid for you to rent if you have the money to make the down payment (which unfortunately I never did, but know many people who went from >€2000 rent to ~€1400 mortgages)

ABCDE,

That’s curious, both in Ireland and Spain mortgages are much lower than rent

You’ve both said the same thing in different ways; not sure if you were surprised.

Nibodhika,

See kids? This is why you don’t reply to comments before coffee

ABCDE,

(:

paddirn,

Scary at first, I hare any sort of debt, but I’m about 7 years into it now and I seemed to have gotten in at just the right time, so I’m thankful at how relatively low my mortgage is. I’ve just gotten used to having the debt now. I don’t even think about it in the long-term, to be honest. As long as I can hit my rent every month, that’s all I’m worried about. Paying it off will happen eventually, right before I die I’d guess.

It’s a pain having to constantly maintain stuff, but it’s been an education learning how to fix shit up around the place, one youtube video at a time. So many helpful people out there recording themselves fixing every random-ass thing possible.

rimu,
@rimu@piefed.social avatar

It's not a 15 (or 25) year commitment - you can sell the house any time and use the money to pay off the mortgage.

DieguiTux8623,

But the price of the property can decrease, so it’s better considering an asset with a stable value over time (given the area, energetic efficiency, etc.).

ABCDE,

Property is one of the most stable assets; even if there’s a crash you can still live there until it recovers.

TheKracken,

Yup this was my thought. Either A) you locked in “Rent” for 15-20 years or you can sell it (usually at a profit) if you need to move or get rid of the property.

jordanlund,
@jordanlund@lemmy.world avatar

30 year mortgage at 52 and 1 heart attack… “The mortgage will outlive me!”

OTOH… locked in $2,000/mo. housing payment for 30 years… It’s already paying off as the rent on our old place is $2,300/mo. now.

ABCDE,

Even if it was the same amount or a bit higher (or perhaps even a lot!), it would be better as you aren’t throwing the money away. Good job though, despite the health.

Cruxifux,

I was stoked. No more land lord, and instead of paying your landlords retirement you’re paying into yours.

crawancon,

keep building that equity!

DontMakeMoreBabies,

My rent was about $200 bucks cheaper each month but I can sell this and my payments go towards something I own rather than something the landlord owns.

Plus I can upgrade something I own in ways I'm not going to do as a renter.

shasta,

Rewiring the Ethernet in my house was exhilarating

LibertyLizard,
@LibertyLizard@slrpnk.net avatar

I was a bit nervous at the time but looking back it was absolutely the right decision. If you’ve always been a renter, you can’t know the sense of peace that comes with knowing your home belongs to you and you can’t be evicted by someone else’s whim. I wasn’t aware of how it was weighing on me until I was free of it. Yes, I have to pay a mortgage but only a few years later it is much cheaper than local rents that I’d otherwise be paying. Overall it’s a much better way to live as long as it lines up financially for you.

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