When our kids were small we bought our first home, a 1256 square ft house in the middle of town, neighbors were within an arms reach. With that small house there was an exceptionally small mortgage. Our family of five was bursting the seams of that little house, we longed for privacy from our neighbors, rooms for each child. A home that would accomodate our extended family during holidays and so we sold the little house, bought property on the outskirts of town and built the house where we currently dwell.
A larger house, a larger mortgage but it was still within our means. After living in the house for two years, we refinanced. Two years later we refinanced again. Many people at the time were refinancing to dip in to their equity, home appraisals were astronomical. My parents had given us sound advice which in turn became our saving grace. My dad had warned that the bubble was going to burst, he encouraged us to research the different refi's offered. In doing so, I learned it was a bad idea to end up with an adjustable rate mortgage, to stick with a loan amount we could afford, not what the lender told us we could borrow and that every time we refinanced, we were prolonging our loan for a home we planned on living in for the rest of our lives.
Our mortgage is uncomfortable, it is fifty-one percent of our income. Thank the lord above that we still owe less than it appraises for today, so if we were to sell, we would make a little bit of money.
There are other cost factors that changed considerably since building this home. We opted for propane heating, hot water and stove (natural gas was not offered here). To heat our home we fill our propane tanks four times a year at about $450 each time, thats a total of $1,800. Our electric bill has risen dramatically, we have averaged about $1,800 annually. Water service averages $480 annually. On top of our mortage it takes an additional $340 every month to "run" our home.
What we would do to have that 1256 square ft house back. As they say, "hind sight is twenty-twenty", we can't undo what has been done so we have a plan to move forward. Within the year we want to replace our furnace with a heat pump system, it is a cost effective way to conserve energy. My husband is researching solar energy and what it would take to build and install our own solar panels, which would significantly reduce our costs and the drain on natural resources. Paying an extra mortgage payment every year would reduce the longevity of our loan by ten years. Plan B is to sell this home, downsize and take the lessons we have learned with us.
Suggestions, advice and words of encouragement are always welcome :)