So the appraiser showed up the other day, after my son, a housecleaner, Gerardo’s crew, and I spent two days sprucing up his house and yard. He’s trying to refinance the downtown house, to escape the scheduled balloon payment inherent to the 30/15 loan he took out when he moved down here from San Francisco.
I’d helped him to qualify for that mortgage, figuring he’d be here about five or six years and then (as he planned) would go back up to the City.
That was before the Crash of the Bush Economy… As you know, we lost our communal shirts in that, six ways from Sunday.
We did manage to hang onto the house, though, even though we sank underwater to the tune of about 80 grand.
So over the past eight years, the economy has turned around, people have jobs, young folks are buying houses again, and his neighborhood is once again gentrifying.
It’s all Obama’s fault, of course…
Seeing that interest rates were about to rise, M’hijito managed to lock in a low rate through the credit union…something like two days before the Fed raised its rate. All we’ve been waiting on was the appraisal.
Last time we tried this, the appraisal came in well below what we felt the house was worth. The cost of the refinance struck him as too high, and the fact that the appraisal made it look like we didn’t have 20% equity in the house (we’d put 20% down at the time we bought!) meant he’d have to pay mortgage insurance. That irked him so much he declined the deal.
This time he got much better terms for the loan. A-n-n-n-n-d…
The house appraised for $300,000.
That’s $65,000 more than we paid for it, and about $145,000 more than it was worth at the bottom of the Bush Recession.
Meanwhile, just down the street from the Funny Farm, a house that’s the same model as Wonder-Accountant’s just went on the market. Hers has the same square footage as mine, and both of our places are on larger lots than said new offering. They want $395,000 for the shack!
Holy mackerel. I paid about the same for this place as M’hijito and I paid for the downtown house. So…kaching kaching…let’s imagine the seller extracts $385,000 from some sucker. That would put the value of my shack at $150,000 more than I paid for it.
Welp, the value of this place is really neither here nor there for me, except insofar as it affects the property taxes. But where my son’s house is concerned, the assessor’s valuation is a HUGE relief.
It means my son will not have to worry about being turned out of his home when the present loan matures, only a few years hence. If interest rates rise back to their historic norms, there’ll be no way he could afford to refinance what he owes for that place. At 4 percent, he can pay for it; at 8 percent…not so much.
So he should be in pretty good shape indefinitely, assuming he hangs onto his job or moves into a better one. If he chooses to move back to the City — or to Oregon, where some of his friends are, or to Idaho, where he figures there’ll be more water in the ongoing drought — he will be able to sell the house without a back-breaking loss. Who knows? He might even make a little profit on the thing.