Continued from here…

$300,000. That’s the amount that Alaska Pacific Bank was willing to sign over to us at the drop of a hat. During the AHFC homeowner’s class, we were told a simple formula to guesstimate how high our mortgage could reach and our combined incomes topped it out at only $210,000. You can imagine the shock we had when we realized how wrong we were.

We spent that Friday evening going over the large amounts of practically incomprehensible paperwork. The $300,000 loan would be good at 5.5% interest, only 5% down, and the closing costs would be about $10,000. It would have stretched our finances to the limit, but conceivably, we could have taken that loan out on Monday!

The part that gave me the most pause, though, was the schedule of payments. The magnitude of a 30-year loan doesn’t quite sink in until you see the date of the final payment: April 1st, 2036. 2036! I’m picturing the end of fossil fuels, world-changing contact with extra-terrestrials, or at the very least, flying cars! Are we really ready for such a protracted commitment?

We had plenty of time over the weekend to reevaluate our financial lives. Could we afford a waterfront, sunlit house? Would it be possible to build our own home? Should we even consider pushing our limit, or should we look into something we could pay off in a lot more time?

We also started to talk more seriously with other homeowners, and of course, the suggestions started to come in fast and furious. Spend your limit on waterfront – it’s an investment! Get a place with an apartment so that you can rent it out and let someone else pay most of your mortgage! Spend as little as possible so that you have some remaining cash flow for emergencies!

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