Origin Story

My journey toward becoming a real estate broker is motivated by my life experience, and how I’ve had huge changes in my life as a result of choosing where to call home. My wife and I purchased our first home in 2005, which was as soon as we were able to. By that time, many of our more “successful” friends had already gotten into the red hot market of 2000-2005, and some had already successfully flipped a home or moved into another and kept a rental. Our meager non-profit salaries and the early stages of our career only gave us the ability to seek a low-downpayment, 5/1 ARM loan to begin being homeowners in an expensive DC suburban market. Within just a few months, prices and appreciation flatlined. Then 2008 happened and the bottom fell out. There, in our late twenties, with salaries that were just getting us by, we found ourselves dreadfully underwater in our mortgage. At the time, we considered everything, from “jingle-mail” surrendering and abandoning/foreclosing on our property, to banking our hopes on striking it rich through some kind of benefactor or windfall. Those didn’t play out, so instead, we used strict budgeting and played tricks with cash flow in order to take small bites out of our mortgage principal, one at a time.

You know those pre-printed “checks” that some credit card companies will send you with a balance transfer offer? Well, we know you can’t pay your mortgage with a credit card, for good reason. But nothing prevented me from writing those checks to myself, depositing them in the bank, and then using that money to pay down principal in addition to our monthly mortgage payments. If I saw a check offering a 0% promotional interest rate for a period of 10 or more months, I’d first look for the transaction fee associated with cashing the check. At that time, fees were routinely at 2-3%. Quick math allowed me to compare this vs. keeping a principal balance which for us was financed at 4.25 (adjustable)%, and make a decision to take as big a chunk as I could out of the principal balance, and then set up auto-pay to the credit card company to ensure I would pay off the balance transfer before the time expired and rates went back to 18+%. I did this at least a dozen times over a period of 10 years, and it made a HUGE difference for us.

During that time, we actually refinanced to a HIGHER (but fixed) interest rate of 5.625, and then down again to about 4.75%. We couldn’t bear the perceived risk of being in an adjustable rate mortgage during periods of wild uncertainty. Ultimately, we’d have been better off keeping the ARM because rates were held very low for the better part of the ensuing decade, but for peace of mind alone, it was worth it to us. All that time, though, I kept doing the credit card balance transfers, careful to pay them off before they flipped to higher rates. In the end, the price of our home never did bounce back. We bought for about $330K and sold 13 years later for $270k, and had invested another $40k in improvements to the home over that time. This means when we FINALLY sold our home, we realized a $100k loss. But thanks to my strategy of paying down the principal aggressively over the years, we had already paid off the original HELOC (2nd mortgage) which got us into the home, and chipped away significantly on the first mortgage principal as well. After the sale, we walked away with a check for about $45k after all expenses. That was enough to give us the seed money for our move to Denver and eventual next step in homeownership.

As bad as this financial loss felt to us, what had felt worse the entire time was a sense of feeling trapped by our own decision. Ultimately, we realized that our mobility would enable a different quality of life (hello Denver!) and that we knew we’d take a loss. We just didn’t know “how bad” a loss it would be. Once we decided to sell and make that big move, the dollar figure barely mattered to us anymore. I know that some sellers will hesitate to make a similar decision for themselves during a tough “buyer’s market” that we currently find ourselves in. From my own experience, though, there’s almost no figure worth feeling trapped in a home that doesn’t suit you, and making your best next move when you know it’s time to do so is always worth it. For anyone feeling this kind of trap right now, I encourage you to double down on chipping away at your mortgage principal. Your mobility and freedom are worth it.