Ten years. As of last Wednesday, I have owned my small house in one of the best small towns anywhere in the world for ten years. Yea, I'm a bit biased, but I love it here. Overall, these have been fantastic years, years of joy and tears, many friends closer to me than family, lots of gossip and secrets, as is true in any small town. I love it here in Calhan, Colorado. Even more, I love my house.
I *love* my house, my home, my sanctuary, my pride, my blessing, my curse.
In about three weeks, I'll be putting a for sale sign up in front of this cozy little place I've called home for the last ten years. It has been, without doubt, the single hardest decision I have ever made in my life. I have ten years of my life invested here, not just in my home, but my community. When I bought this home, I said this was the place for me for the rest of my life, I will never move again, here I draw the line and say "This is home, forever. Here I will live, here I will die." I had no doubt at all that buying this house was exactly the right decision.
Just as certainly, I have no doubt at all that selling my home is exactly the right decision. My home has become a battle, a battle I cannot win, a battle that just isn't worth fighting anymore.
In a nutshell, I, like many others, have fallen behind on my mortgage. During the months of November 2008 through March 2009, my job cut my hours to the bare-bones, anywhere from 15 to 25 hours a week. At $9.00 an hour, after taxes, I could keep the lights and heat on, or I could pay the mortgage. Like many millions of other Americans, I fell behind. While the hours at my job did increase to an average of 32-35 a week starting in April, and I have managed to pay at least something towards my mortgage every month, I am currently three months behind. $2394.04, to be exact, to cover all the arrears, late fees, and current month.
Here's the reality.
I currently work as a customer service representative for a major credit card company. I'm one of those people ya'll like to yell at when you call the 800-number on the back of that little plastic rectangle you so lovingly maxed out at 21.99% interest and are pissed off because we won't raise your credit limit so you can buy more stuff.
Honestly, 99% of the people who call are super nice, really sweet, and actually, a lot of fun to chat with! But oh man, can that 1% really stress you out! Here's a tip: When you call your credit card company, be sweet. We're a lot more likely to help you, even bend the rules a little if we can, if you are nice and fun to chat with. The sweet ones get that second courtesy late-fee waiver in 12 months. The ones who yell, don't.
Anyway, currently, I average 25-30 hours a week, at $9.00 an hour. My take-home pay is between $725 and $840 a month, after taxes. No benefits. No sick pay. No holiday pay. No insurance. I do get to telecommute, meaning, I work from home, which is awesome, don't get me wrong. I love having strangers yell in my ear while I sit in my bathrobe and slippers :)
I thank God I telecommute, because if I didn't, I would have lost my job back in December when my car broke down. December, also known around here as Hell Month, because it was the month my pay totalled $662 for the month, and my mortgage is $589. December, the month I did not have a Christmas, the month I fell behind on my mortgage. My car still hasn't been repaired, because I cannot come up with the over $700 I need to fix the transmission. Makes it really tough to find a second job when you don't have a way to drive 30 miles to the next closest town, Colorado Springs, which doesn't exactly have much in the way of jobs available anyway.
I'm not a big spender by any stretch of the imagination. I have no credit cards, I have no car loan. My mortgage and my student loans (currently on economic deferment) are my only debts. I have no cell phone, no satellite tv, no cable tv. My electric averages $45 a month, water & sewer $49 (that's the minimum charge), phone $45, internet $35, trash $22 a month, car insurance $35 a month. Phone and internet are required for my job, otherwise I'd probably do without them. I spend about $30 a month on food. Dog, cat, and goldfish food cost me about $20 a month. I do not go out to eat. I do not drink. I haven't been to the movies in three years. I'm currently getting my asthma medications for free through a pharmaceutical company program. The library is my dearest friend. Although I smoke the occasional cigarette, I haven't actually bought a pack in over a year. I live cheap, and I always have, even when my business was booming years ago and I was raking in the cash. Savings that are now gone, as I used them to stay alive and in my home when I found myself completely unemployed three years ago, savings wiped out when it took me 18 months to get a job - any job - a job I still work.
I'm incredibly lucky my mortgage company hasn't already started foreclosing on me. They know my situation, I keep talking to them, keep trying to work something out. I sent in the paperwork for one of those new affordable housing loan modifications back in early April, they say it could still be another five or six months before I get an answer. Meanwhile, primarily because of my current income situation, there isn't anything else they can offer to help me. They keep accepting the payments I do send in, which is a minor miracle, truth be told. Everytime I talk to them, they keep asking for the entire arrears yet also say, well, if you can't pay it all, pay whatever you can. In between the words they are obligated to say, reading between the lines, I get the message that as long as I keep paying something, anything, every month, I'm kinda on the low-priority list for foreclosure. Besides, they are in Ohio, I'm in Colorado. If they foreclose on me, they know it'll be 110-125 days before I have to abandon the property, and that is 110-125 days they won't get a penny from me. Add another 60-90 days if I choose to file bankruptcy during that foreclosure time period. Which I probably would, just so I could get more money saved to move elsewhere. At least this way, they keep getting something, and maybe more down the line from me. I am not a religious person at all, but I do pray that I stay out of the gunsights of foreclosure long enough to sell the house. I am grateful that so far, I've been beyond belief lucky I'm not already out on the streets.
It's been one hell of a struggle to keep up with the mortgage these last three years, since my business failed. Even with the loan modification I was granted last July, almost exactly a year ago (you can read about it here), I've not been able to stay on top of it. And in just two years, when the rate adjusts again, I may be really screwed.
I sat down earlier this month, and thought about my options.
Option one: Beg, plead, pray for 40 hours a week. At $9.00 an hour, even if I were to be scheduled a full 40 hours a week, every week, my take-home after taxes is $1036.80. If my job actually gave me that many hours, if I were to put every single earned penny towards the mortgage and pay nothing else, it would take me four months to get caught up. In the meantime, I would lose my electricity, my heat, my water, my phone, my internet service, my trash service, and, of course, somewhere along the line, run out of toilet paper, toothpaste, shampoo, and food to eat. Of course, the moment I lost my electricity, phone, or internet service, I would also lose my job, because I telecommute for my job. Okay, so option one is a no-go.
Option two: Keep doing what I've been doing since March, which is pay a month's mortgage, plus a few dollars extra towards the arrears - most months, which has been $20-$25 a month, while keeping the utilities on. Hope and pray my hours stay at my current average and don't get cut over the winter again like they did last year. It will take me 7.98 years to catch up. Somewhere along the line, hopefully, can get the car repaired, get a second job, or maybe one of the businesses that have closed in my small town over the last 18 months will reopen, and I can get a second job I can walk to. That is a lot of hoping, I know. But hey, it's possible, just not probable within the next few months, much less year. So option two is a long shot.
Option three: Stop paying the mortgage completely, save every penny I earn, and let the bank foreclose, which if I stopped paying them something, would likely happen within two months, another three months before I'm on the street. Probably get around $3500 saved up in that time, not enough to stop the foreclosure since additional arrears would have accrued, but enough to get the car fixed and move into a rental somewhere. Get stuck in rental hell for several years, unable to get a mortgage, difficult to save money for downpayment, but doable. Trash my already ruined credit. Walk away from a home I've lived in for ten years with nothing, at all. Option three is feasible, but unpleasant.
Option four: Sell the house. If I work real hard, get this place spic-and-span, do the various small repairs that are needed, get very very lucky, I might, just might, get somewhere between $100,000 and $110,000. I might, just might, sell it within six months. Houses have always sold slow out here, but at least they are selling. I currently owe $82,000 on the mortgage. After paying the mortgage and realtor, I would pocket somewhere between $12,000 to $21,000. Sell every stick of furniture I own, just about all my possessions, that'll be another $2000-$3000. Take the money, move to Kansas or Nebraska where I can buy a small, cute, nice house for $15,000-$30,000 total, and start all over again from scratch, at age 45. Buy a house for cash, or for a very very small mortgage. Hell, it probably wouldn't even be a proper mortgage at such a small amount, if I dumped everything I have into the down payment, it'd probably more likely be a property-secured signature loan. I can take my job with me, after all, since I telecommute. Granted, I leave a house I've lived in for ten years, a house I've already dumped around $15,000 into the roof, plumbing, sewer line, electric, insulation, bathroom remodel, appliances, kitchen update, phone wiring, landscaping, and small repairs. A house I put a $22,000 down payment on. A house I love. A community I love, even though all of my very closest friends have all had no choice but to leave either for their jobs or losing their own homes. A community I'm a part of, even though most of the businesses have closed, but will over time open again. Option four means a loss of about half of what I have invested so far, not including all the friggin' interest I've paid on the stupid adjustable rate mortgage I have. Option four means the potential, if miracles do really happen, of a fresh start elsewhere without the pressure of a mortgage I cannot afford, of the potential for freedom. Option four is realistic, and despite the upheaval, smart.
You see, when I bought my house ten years ago, it appraised at $104,000. Almost two years ago, before the housing market really collapsed, it appraised at $115,000. My house went up in value $11,000 in about 8 years, and right now, it will probably appraise at $105-$110, according to a very good friend of mine at the local bank. Which means in the last year, my house value has lost most of what it took eight years to gain in value. Still, at least I'm not upside down like many others. Reality is, I could live in this house another 20 years, and it will probably never get very much above the $115,000-$130,000 range. Meanwhile, I'll continue to dump huge chunks of my income to interest payments. Screw equity building, it's a fallacy in this circumstance. I can never build enough equity to cover the mortgage interest I'm paying. Never. I would have to sell my house right now for over $150,000 just to cover the more than $95,000 in interest I've already paid over the last ten years, plus the repairs and down payment costs. And it just will get worse: If I wait five years, hoping the market rebounds drastically, I would need to sell my house for more than $180,000 just to cover the interest I've paid, repairs, and down payment. Wait ten years, more than $205,000. Wait twenty years, more than $230,000.
I'm sorry, but the odds of a small, over 100-year old, 1,040 square foot home in a tiny town 30 miles from the nearest Walmart raising that far in value within the next five to ten years are infinitesimal. Possible? Sure, anything's possible. Realistically probable? Unlikely.
Look, don't get me wrong, I knew all this when I bought my home. I knew that I wasn't buying into the next great boom market. I knew that my home, being on the small side, being in a somewhat remote area, would have limited appeal should I ever resell it. I bought it because I wanted to spend the rest of my life here. I bought it because it was affordable. I bought it because I owned my own small business, which was very successful at the time, but didn't want to buy something big and expensive in case things took a turn for the worse, which, as the entire world knows, did indeed happen. I paid $80,800 for it, far below appraised value, because it needed quite a bit of work. You know, that roof I mentioned before, the plumbing, the sewer line. I bought it because it fit me perfectly and I knew I would be happy in it for the rest of my life. And I have been happy, very happy. I just can't afford it.
I know how ridiculous it sounds to say I cannot afford a $589 a month mortgage payment, when others are going bankrupt with $1,500 or more mortgage payments. But truth be told, I can't afford $589 a month anymore. Two years from now, under the terms of my current loan modification, my interest rate will go from the current 5.25% to 7.5%, then the year after that, to prime plus 5.99%, resetting every year, never to go below 7.5%. So even if somehow I managed to get caught up, and to stay caught up, in two years, my mortgage payment is going to go up about $180 a month, if not more, not even including any further increases in my homeowner's insurance or taxes.
What are the odds that I will be in a better job in two years? Probable. Until my car broke down, I was actively looking for a better job. I still keep looking. Are they odds I am willing to play, at the risk of foreclosure between now and then? Can I afford to keep dumping money into the coffers of the mortgage company knowing that I can never recoup all my investment? Seriously, the job and housing market has barely changed here in the last ten years, what are the odds of it changing drastically in the next ten years? And changing enough to make it worthwhile to sit and wait?
So I'm going to sell my house, move someplace where nobody knows me, and start all over again from scratch. Buying furniture at Goodwill. Dishes at yard sales. Meeting people, making friends. Remodeling, repairing, renovating. Everything I did when I bought this house and moved into this community, which I do love even though, frankly, other than my house, there is nothing left here to hold me down. Everyone I deeply care about is gone.
To get my house ready to sell, I've got a ton of work to do. I have ten years of clutter and junk to dispose of - I'll be the yard sale queen of the town this summer! (Earned $206 at the first yard sale last weekend, hopefully the rest will be just as good if not better!) Every room needs to be painted. There is drywall to be repaired. Gutters to be installed, a broken window, a ton of yard work, garage door to rehang, lots of small projects that I started and never finished because I always thought I had time. Like finishing tiling the kitchen floor, finish replacing the ceiling in the bathroom, finish replacing the window in the living room, hang the molding around the bedroom door I replaced. You get the idea. A good friend who is a realtor gave me a ton of advice, and a long list of things to do to get the house in as good as condition as possible to show it, and do it fast, get it on the market now before the summer ends.
Start over someplace where I can live without a mortgage, or a very minimal one. I love small towns, I love small houses, I love ranching and farming communities. I love the mid-west, the glorious summers and woodstove winters. There are a lot of small towns in the far eastern parts of Colorado, western parts of Kansas, southwestern parts of Nebraska, and various parts of Wyoming that fit the bill, and have housing under $50,000. I'm moving on.
God, I love my house. Goodbye.
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