My Kingdom for an Interest Buy-Down.

So, in the fair Kingdom O’ Martha Points, the coffers were getting low. The peasants (read, three children and two cats) rebelled at the taxes and threatened to be revolting. A new plan was necessary.

Enter stage Right: Le Refinance.

Yes, it seemed it was time.

Now in the interest of maintaining some degree of privacy, I will not use actual numbers. I will be vague in ways designed to tell the tale without sharing actual facts.

Like politicians do. But with more potential for accuracy.

In 2006 we bought a house. Let’s say for $1,000,000. Because that’s a nice round number.

Between 2006 and 2010, things got a little iffy in the real estate market. Some of you may have noticed.

In 2008 we got a notice from the county that said that as a personal favor, they had applied a county average to the value of our house and it was now worth $1.46.

Okay okay…let’s say $500,000.

In 2009 we got another notice from the county that said “Due to further changes in the market, we will now be paying you to live in the house.”

Not really.

But further depreciation had happened, let’s say to $250,000.

Our original home loan was at interest rate of eleventeen percent.

Reasonable, certainly, but with the 4000% loss on our real estate anything would be an improvement.

We watched interest rates go down, down, down…
…and when they hit -22%, we went for it!

Except that didn’t really happen.

But they got low enough that it seemed worth it to refinance.

Now pay attention, here’s where things get interesting…

In order to get the loan without points, the loan-to-value ratio needed to be 80-20.

So that meant that the value of the house on appraisal needed to be somewhere near 4 trillion dollars.

Give or take a bit.

Except that the county had appraised the house at the same value as your average chicken coop.

Without chickens.

It was going to be quite the feat to bridge the gap between chicken coop and 4 trillion dollars.

So we cleaned and scrubbed. Fixed and mended. Polished and buffed.

Things sparkled in this house that have not sparkled since the Carter administration.

Trying to close that gap between the county valued chicken coop and the 4 trillion dollar target.

The appraiser came on Wednesday.

He seemed very nice, he said complimentary things, but no actual numbers were shared.

We waited…and waited…and waited.

And on Friday we got the word.

He put words in his appraisal like “meticulously maintained and updated.”

And we hit the target!


At first the mortgage broker said that we hadn’t quite hit the target. And hadn’t actually reached 80:20 loan to value.

I argued. And threw large words around like “unhappy,” and “not satisfied.”

The mortgage broker re-checked his figures.

And lo and behold…80:20 loan to value!

Which meant those nasty points didn’t apply to us.

We spent Friday afternoon feeling smug and superior.

Until we remembered that 4 trillion dollars was just an imaginary number, and the house is still worth much less than we paid for it.

You’d think that there simply isn’t enough cognitive dissonance in the world to bridge the gap between what we paid for and what it’s worth now.

But you’d be wrong.  We’re good gap bridgers, Himself and I.

42 comments

  1. Wow! Math has never been one of my favourite subjects but with the graph, you made it all so clear. It must be your madd graphing skills. Plus I’m a visual learner. Thank goodness you put your foot down and demanded your Palatial Ranch back and said goodbye to the coop. Never mind that its the same abode, we won’t mention a thing to the mortgage broker…lips are sealed.
    Dana

    1. I knew those graphs would be a Contribution to Society. It’s the reason I worked so very very hard on them.

      I think I can send them to one of our local universities as a teaching tool.

  2. Ah, why do I even come here?

    You’re just too good. Too.good.

    I’ll keep coming cuz I enjoy it immensely.

    WOW. To be you for one day..

    now, I’ll pick my shoulders up off my knees and get started while I sing to myself, “one step at a time.”

    I used to do this to myself in high school, too, I hung around with the smartest prettiest girl in the class. Why do I do this???

    OUT OF THIS FREAKIN” WORLD POST.

    1. You are wonderful, dear one. I’m glad my post made you laugh.

      And you can tell me that I’m one of the “pretty ones” all you want. I will never shun you like REAL pretty girls would.

      I will be a nice and inclusive “pretty girl.”

  3. At first I thought I might glean some insight from this post because I keep thinking about refinancing.

    Still confused, but I am glad to see that it worked out for you! A little elbow grease and schmoozing always pay off.

    1. I doubt that I will EVER be a non-confusing resource. I don’t think i have it in me. :)

      But it worked out as well as it possibly could given the current market.

      Which, truly, is saying a LOT.

  4. That’s one blinged out chicken coop you’re rockin’.

    Good for you. And congrats!

    Is your interest now down to ten-teen percent?

    1. I think if I use a word on my blog, it becomes a Word.

      That’s the rule in my universe.

      Other people in other universes don’t always see it that way, but I ignore them.

    1. Argh! I hate when I forget to carry the 2! Now I have to do all those graphics over…

      And yes, “Meticulous” was actually used IN THE REPORT!

      I am fourteen shades of Martha-Happy now.

    1. After completing the post, of course, I thought of things i could have done to make the graphics even funnier.

      Which is this thing I do.

      But I was tired, my graphics program had already sent me nasty memos about union violations, so decided to just call it a wrap.

      But a big X over the chicken would have been way funny.

      I’ll remember that next time.

  5. That is, without doubt, the funniest math lesson I’ve ever experienced. :D

    Congrats on avoiding those points!

    1. In a blog where I am perpetually on a quest for points, it is ironic that I was so happy to dodge those.

      Irony is NOT dead. I don’t care WHAT Oscar Wilde said.

      If it was Oscar Wilde that said that.

      I often make this stuff up.

      1. Irony is alive and kicking. It’s Oscar Wilde who’s dead.

        Which is kind of ironic.

        Also, a shame. That wallpaper really didn’t deserve to win.

    1. I almost dropped out of grade school over those chicken coop fractions. Good thing you were there for me.

      Think of what might have happened.

      I might have needed that purse for the profession for which it was intended.

  6. I agree with Megan. More visuals. You make good visuals.

    With words like “meticulous” in the report? I’m becoming suspicious that your kitchen might really look like it did in your previous house that jack refinanced post…

    Congrats!

    1. No no! That picture was taken on the day of the appraisal!

      It was HUGELY meticulous then.

      Now it has crumbs and junk mail.

      Dark floors. NEVER EVER GO THERE.

  7. Hilarious way to explain the CA real estate market! Any time you get in the dumps about it, just look at your camping pictures. A house in a state with trees like that is worth way more than a chicken coop. :)

  8. Hooray!!! I’m SOOO happy for you! You need to celebrate!

    And I think you need to incorporate that chicken coop drawing into your logo. just saying.

  9. Let’s see…personal faves of this post:
    the graphics really helped me SEE what you were trying to say…like.
    throwing around “big words like ‘unhappy’ and ‘not satisfied'”…also a like that you have such a deep vocabulary.
    talking about a chicken coop because I really DID live in one (converted to a house, but still)…hmmm perhaps that is a blog post topic for another day.
    AND that you don’t have to live in a van down by the river.

    So overall? This post hits the target. Good job.

    1. I’m sorry…you lived in a CHICKEN COOP?

      Yes, I got the converted into a house part, but still….a CHICKEN COOP??

      Yes, that needs to be a story. On that nifty blog you write.

      Hear me, young lady?

  10. At this point it is clear to me that in addition to super spy, you should also be employed as a math teacher? Call it Lori-gebra. Very important stuff.

    Lori-gebra….It’s designed to keep you out of chicken coops….or to be able to buy chickens to fill up the coops that you already had.

    *eleven-teen! Love the LOTR reference there. My husband always uses that number with my daughter and she always sighs very loudly and says, “Dad, you know that isn’t a real number right? Not unless you’re a hobbit, and you are too tall to be a hobbit!”

    1. I think i will now insist that Lori-gebra be taught in all local elementary schools.

      And that’s so funny…I’ve been saying 11-teen so long I had forgotten where it came from! (Haven’t read the books since I was a teen).

      And I was prepared to take all the credit!

  11. Now that you’ve clearly demonstrated your expansive knowledge of the real estate market in both words and pictures, next please explain the subprime mortgage crisis using only matchbox cars and kazoos.

  12. Always get a good laugh whenever I visit, but today it went beyond mere laughter and might have actually been dangerous to my health because I could have really hurt myself falling off the chair.

    Aside from the perilous nature of this post, I’m so happy to see we are kindred spirits when it comes to statistics — we can prove any point we darn well want with any numbers we care to choose/use. It’s always so much more fun when we just make ’em up! More interesting too.

    This may not necessarily be the most *enlightening* post, but definitely the most interesting one I’ve read today :)

  13. Hey, all you have to do is live for another 100 years or so and your house should be back to its original value! Until then, enjoy the lower interest rate. :)

  14. I never want to just skim your posts because I don’t want to miss a single word so I saved this until I could give it the proper attention it deserved. Hilarious as usual. 4 trillion may be an imaginary number, but who cares if you are happy where you are living, you don’t have to pay points, and you lowered your your eleventeen percent interest rate significantly. Virtual high five.

    1. We were pretty damned stoked, let me tell you!

      And we are very happy here, and we remind ourselves was the reason we bought the house was needing to give our children, with their recently torn-apart families, a home that was safe, loving, comfortable and *theirs.* It was important to us that they feel that. And…we could give it to them.

      And if we just live here till were in our 90’s we should break even.

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