When I was a child, I thought a million dollars was a lot of money: it's the equivalent of making one's dreams happen, to hitting the jackpot, a life-is-good card for the rest of one's life. Well that might have been the case back in the 1990's when I was a kid, but it's not the case now; a million dollars is practically the median price for a single family home in the Los Angeles area; talk anything over 3 bedrooms 3 baths and more than 2,000 sq. ft. and you're talking seven figures. (Gosh, there was a time when I thought six figures was pretty awesome). Hence the idea of a mortgage: pretty simple, you take out a loan to buy a house, you pay the loan back over a number of years. With interest rates now at a historically low rate (although, the Fed just mentioned in its past meeting that they might raise rates soon) at around 3.5%, it doesn't sound that ominous, like a drop in the bucket compared to the principal amount of a house. But the awesome thing about a mortgage is that it compounds itself, where the interest compounds every year so that by the end of paying off the mortgage one usually has paid DOUBLE the original loan amount (the only benefit being not having to pay it off all at once, spreading it out over 30 years).
The whole concept of a 30-year fixed mortgage scares me. The fixed doesn't actually mean "locked into debt" or "imprisoned" more than just "the rate is set a specific rate," but it certain sounds intimidating, and the 30-year part doesn't help matters. How am I supposed to know if I can make all those payments for 30 years? I haven't even lived 30 years on this earth, and for 20 of those 29 I was just screwing around! Not only that, but the banks make getting a mortgage seem like a privilege, like I have to apply and qualify to be locked into debt for 30 years, they have to check my financials and credit report to see if I'm trustworthy enough.
I do appreciate the process of getting a mortgage, though: I finally understand what adults more mature than I mean when they explain why they can't allot too much money to discretionary spending: "I've got a mortgage man." I'm looking at $2000/ month for mortgage and already balking. That'd be the highest rent I've ever had to pay! And that's not all if I get a condo or apartment: this new idea of a "HOA" seems like the mortgage's evil little cousin: not as big, but just as "fixed" and just as needy, to require attention every month for 30 years. Why am I trying to buy a house again?
I'm a pretty risk averse person and never have liked being in debt to people: I've tried to return money I borrowed from others for lunch really soon afterwards, and the whole idea of "interest" makes me anxious due to it just being an extra cost, simply for the ability to get money. I cut spending for awhile after law school and lived with my parents to pay off my law school loans as soon as possible. Not my cup of tea, debt; I'd rather just live within my means and pay off everything with the money I have, live a dignified life owing nothing to no one. Alas, that's not how the American housing system works, and fortunately a house is probably the biggest purchase I'll have to make in my life (other than having a child, which is a different kid of payment). As much as I lay awake at night worrying about it and have nightmares of a big bad ogre named Mortgage scooping me up and dropping me from a high place, I reluctantly will probably attain a mortgage to get that dream house for my future. Goodbye freedom, hello debt!
Fantasize on,
Robert Yan
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