As part of a new ongoing series, the creative brains at Wyndham Capital decided it'd be fun to talk to homeowners who recently went through the home buying, refinancing, or equity process. What did they do that worked? When did they know it was the right time? What didn't go as planned?
We thought you could learn from their stories - we certainly did.
Bob is 65 years old and is an accomplished property and casualty claims professional with over 25 years of construction focused claims and risk management experience. He is married and lives in the Charlotte, North Carolina area. Bob also recently paid off his mortgage.
What was the mortgage process like when you purchased your first home?
- "A very trying experience! As we had never applied for a mortgage prior, there was a lot evaluation of our credit history/credit worthiness. We financed through a local savings and loan association and after a lengthy application process, the app would be put before a board that would either accept or reject the loan. The board met only once every 2 weeks to review applications. Eventually they reviewed our application and we were accepted as credit worthy."
How many homes have you owned?
- "We’ve owned 3 homes."
What was the selling/buying process for you like each time? What helped/what didn't?
- "Each home we purchased was incrementally easier. In 1985 we purchased our second home. Mortgage rates were in the 12% range + points. We had an excellent realtor who assisted us in identifying local banks for the best rates and helped navigate us to a 9% rate. We had sold our first home 2 years earlier so had cash available for a substantial own payment and that helped the process. Selling a home in the early 80’s was a difficult task due to economic conditions and a very common 16% interest rates. We eventually sold our home to a couple who had been renting it for a year or so. Our purchase of our next home in 1996 was much easier thanks in part to the efforts of our realtor, great credit history, substantial down payment and a better understanding of the process."
Let's talk mortgage rates. You've obviously seen them fluctuate and change throughout the years. What were mortgage rates like when you first became a homeowner compared to today?
- "Rates were in the 10% range + Points when we purchased our 1st home (1978). We were 1st time buyers with little credit history. We opted for an adjustable rate of 11.2% as it was about our only option. It allowed for a guaranteed rate for 24 months and then could rise or fall as much a 2%. We refinanced within the 1st term to about 9.4%, 30 year fixed rate. Our second home was purchased in 1985 with a good credit history at about a 9% rate. We refinanced that home a few times over our 11 years at that address. I believe we had about a 7% rate when we sold it in 1996.We purchased our third home in ’96 with a rate of about 7%. Again, with an excellent credit history and substantial down payment we helped our selves with a discounted interest rate."
How many times have you refinanced? What was your most recent refinance like?
- "We have refinanced each home at least once. Our current home was refinanced 4 times. Most recent refinance was in October 2010 and the process took less than an hour. We combined some other debt, refinancing the new principal on a ten year note at a 3 3/8%. We paid off the mortgage in 6 years and 4 months."
How does it feel to officially no longer have a mortgage? In Scotland, they paint their front door red to signify their mortgage is paid off. Planning on celebrating this tradition?
- "Paying off the mortgage was a life goal. We did it; debt is the enemy and it has been vanquished. Its always good to have financial goals and to remember debt is the enemy, so yes, it feels good. No, no plans to paint the door red."
What tips and tricks to recommend to first-time homebuyers?
- "Remember Debt is the Enemy! If you understand what you need versus what you want, it will help keep you out of trouble. Financing debt is necessary but you need to use this tool carefully. Never take on more than 3 times your net income in combined debt. Never miss a payment. Never make a minimum payment. And DO NOT “try to keep up with the Joneses”; after all, its’ not how much earn but rather it is all about how much you spend."
*Name was changed at request of the interviewee to keep financial information private
If debt is the enemy, figure out a way to conquer it faster. Refinancing is your best option if you're looking to pay off your mortgage sooner.