Nuts and bolts - by request
Bear with me, folks. I'm not done being fabulous yet. ;-)
An anonymous commenter on my mortgage payoff post had some questions that I thought I'd answer here:
I'd be curious to know what you paid for your place.
$249,000 in 2001.
Here's some backstory: It sounds like a bargain now by Manhattan standards, where one bedrooms start at $400,000, but given that I was embroiled in a nasty divorce - and no, I didn't get a cent from it - it took plenty of effort. Oh, I had the money for the required 20% down payment and still met the building's financing requirements (twice the down payment in savings, and my 401(k) could only count for half that amount). In that booming real estate market, however, the co-op board was concerned that as a not-quite-single woman on a single woman's salary, I wasn't the strongest possible candidate, especially after 9/11 and with the economy showing signs of going south. In order to get me through the board review, my parents kicked in a total of $20,000.
Yes, my parents gave me money.
No, I'm not proud of that, especially since to this day my mom won't let me pay it back.
I never would have accepted it without knowing that it wouldn't endanger my parents' finances. Beyond that, I felt strongly in my gut that this was where I wanted to live. After seeing about 20 apartments, walking into my home for the first time during an open house was like a punch in the stomach: I've never wanted anything more.
I should add that I only got the apartment because of 9/11. The day I saw it (September 10, 2001), an offer had already been accepted. The buyer worked for one of the big investment banks in the World Trade Center, whose offices were demolished the next day. He wasn't killed, thankfully - but with his office gone, he rethought his home ownership plans.
I'm not glad that I profited from a national tragedy, but someone was going to buy this apartment. I paid the seller's asking price: my offer was accepted the day the apartment went back on the market, foiling four couples who submitted offers just a day later.
The financing terms
My first mortgage was thirty years at 6.25%. I refinanced just under two years later to fifteen years at 5.125%.
How long it took to pay it off
Six years, seven months, and three days.
I know you live in NYC. Is this typical NYC real estate?
I'm not sure what exactly you mean. Is it typical to pay off early? Not as far as I know. Is it typical to pay a crapload of money to live in a shoebox that faces a brick wall? Most assuredly.
At least it's a nice shoebox.
Do you have a regular salary, or a HUGE bonus filled salary?
Regular as it gets. I make a pretty standard Manhattan middle class salary in the private sector: $130,000, ZERO bonus. The only reason I make that amount in base is because I asked for a big raise last year and got it.
Lest there be any confusion, I'm just a regular Jane here. What I did to make the big payoff happen falls under the general heading of prioritization: Owning my home outright means more to me than most things. I don't own any fancy stereo or computer equipment, and I have no TV reception at all since I don't want to pay for cable. I don't own an iPod, I don't buy MP3's or CD's, and I don't have a Starbucks habit. In my whole adult life (and I'm almost 40), I've had one vacation longer than a weekend that did not involve visiting family. I'm a good tipper and I would never, ever stiff my friends on restaurant bills, but I pick my occasions for spending money on entertainment fairly carefully: the vast majority of the social stuff I do works out to be cheap or free.
There's more, but you get the general idea. I know it's a pretty boring strategy. The cool part is that it worked.
14 retorts. What say you?
That is pretty darn inspiring! Good for you.
Unfortunately in America these days not being debt is considered unusual.
I say it is very cool. Thank you so much for sharng. It is inspiring.
Do you have a condo co-op fee and what is it?
Now that you are no longer paying the mortgage, what is your next goal.
And please, do something nice for yourself - like a great vacation to celebrate.
Thank you so much for sharing. I am inspired by you to pay off my mortgage. I can see by your example that if you prioritize it can be done! Again, congratulations
shadox - thank you! It's a sad turn of events when being debt free is the exception and not the rule, though.
anon - I have a co-op monthly maintenance fee that covers both service and building taxes. It's about $600 per month.
I celebrated with a cupcake today. Does that count? ;-)
hannah - you're most welcome. Best of luck to you.
Wow! Congratulations!
One thing though, what happened ot the guy who backed out? Was he allowed to without repercussions? I know some people lose earnest money but it wouldn't seem they would do that to someone who worked in the WTC right?
But WOW what a coincidence. I'd rethink my home situation if I were him as well.
That's great that you could do that, but as someone who has never had help from the parents, because they simply can't, it really rubs me the wrong way for you to post the fact that you paid off your place as some kind of cred in your bio at the top left of the page. You and your parents paid off your place. Not you.
Again, I don't mean anything bad here. But I'm paying off my own place, and it isn't easy. Putting it up as a badge that you advertise about yourself, when some of us actually have to walk the full mile, is offensive.
great post and you answered some pretty personal questions well. You should reward yourself a little as well. You will have a chance later in life to help your parents.
LAL - he had an accepted offer but hadn't signed a contract yet, so he didn't have any financial repercussions.
anon - I'm sorry the way I've presented this offends you, but what I said in the sidebar is exactly correct: My parents put money against my down payment, but my mortgage was 200K. I paid every cent of that 200K off myself. Believe you me, I am grateful every day of my life for my parents' help with the downpayment. Am I also proud of having killed 200K of debt on my own? Yeah, actually, I am. Anyway, best of luck to you. It sounds like you are working very hard to succeed.
Andy - Thanks a lot. My dad died a few months ago, actually. Thankfully, my employer was flexible and I was able to spend a huge amount of time out there over the last fourteen months of his life.
Hey Frugal Z. Congratulations, and how awesome is that feeling of having no mortgage! I am still in the process of saving for my down payment, hoping that one day I will be able to pay off my mortgage under 10 years.
Congrats!
http://orange4money.blogspot.com/
Congrats! This is really motivating!
I say that's friggin' AWESOME. I applaud you, madam. I'm with you; getting out from under our mortgage debt means more to me than almost anything. My methods of pursuing that goal are probably very different than yours, but it's great to hear your story. Thanks for sharing it.
I think great that you paid it off and I congratulate you for it! I'm just like you -- I don't need toys but value being debt-free! I bought a co-op in NYC (W. Village) at the exact same time you did -- right after 9/11 -- for a higher price ($325K). I'm trying to understand how you paid it off early. How much did you pay per month versus what you were obligated to pay or did you save up and then pay it off in one lump sum? Also, are you concerned that you don't have the tax deduction going forward? BTW, where's your apartment and is it really a 1BR for that price? So many questions... Congrats again!
Thanks, everyone!
Kate - now I'm curious about how you're going to swing an early payoff. I'll stop by your blog and check it out.
Anon after Kate - I worked my way up to paying 2.5x my mortgage each month at one point, though I later ratcheted back to 2.15 or thereabouts. I paid off once my principal approached $10K.
I don't think I want to say exactly where I live, but yes, it's a real one bedroom. I have NO view and I'm right next to the mailboxes, but it's a doorman building with a nice roof deck. I'm not concerned about the tax deduction because I've been getting almost no benefit from it for the last couple of years because my balance was shrinking quickly. It's not that bad. Being debt free is better (for me).
I know I am several months late here but I absolutely love, love, love your post and feel inspired to try to do the same with my mortgage. You have given me the courage to at least contemplate something I previously saw as not just daunting but nearly impossible. Thank you for posting this.
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