Home » Blog » Inspirational » How We Recovered from a $50k Loss
|

How We Recovered from a $50k Loss

*This post contains affiliate links to websites such as Walmart and Etsy. (As an Amazon Associate I earn from qualifying purchases.) By purchasing anything from these links, I may receive a commission at no extra cost to you. More information is available on my Disclosure page. I appreciate your support!

Thank you for Sharing!

Today I want to tell you about how we recovered from a big $50k loss, and give you some tips in case you find yourself in this situation. These tips can also help prevent you from suffering the effects of a huge monetary loss as well.

Pin it if You Love it button
garden

The Background Story

Today I want to tell you a story that starts 18 years ago. In 2007 my future husband decided he was going to buy a condo near where he worked. We don’t remember that he consulted me about it at all. Why should he? We wouldn’t even be engaged until 2 more years.


He worked just outside of Baltimore, MD, and everything was expensive. It wouldn’t have mattered probably if he had discussed it with me, because at this point I didn’t know anything about buying and selling houses, or our local real estate market. Guess what a 2 bedroom top floor condo will cost you in 2007 just outside of Baltimore? $156,000.

So after putting in new carpet, he lived there for a short period, and then decided he would rather live at home again instead. He decided to rent the condo out…..

And risked letting me try one of my first DIY projects– polystaining the kitchen cabinets.

He rented it out for about one year, for enough to cover the mortgage payment– probably a little more.

condo kitchen

Then we got engaged and I had the privilege of telling the renters that they needed to leave! : ) We got married in July 2009, and began our newlywed life in the condo. The condo was smack dab in the city, and I am not a city girl, so it was just a start.

Meanwhile— do you know what happened in 2008?……. A big market crash– known as the Great Recession– second to the Great Depression. Not good. Maybe you or someone you know went through the same thing.

Kitchen After

It Becomes more Personal

Now that I was part owner of a condo, I started to pay more attention to housing markets and values. And I also wanted a house in the country. Since my father in law was a realtor, I heard more of the language and started understanding how it all worked.

My new job wasn’t hard, and we didn’t have very many expenses– other than having a couple of babies. From the start, I wanted to pay extra on the mortgage to pay it off early. So whenever we had a few extra thousand dollars, we threw it at the mortage, all while building our savings. After the market crash, interest rates went down, and we thought it might be a good idea to refinance to get a lower rate.

Condo dining room

One thing I dislike very much, is paying interest. [I’ve never paid interest on a vehicle– choosing instead to drive older models that were paid for.] So we went to the refinance officer for information and found out that in order to refinance, we would need to pay $17,000. That’s how much the bank figured we were in over our heads, should we default on the loan.

We thought about it, and decided, well, we were going to pay it either now or later, and might as well pay it now in order to get the lower interest rate. So we did.

Meanwhile, my itch to DIY was just beginning. We decided to install crown moulding and chair rail moulding in our dining room.

condo dining room

I had learned to navigate city life, but there weren’t any good sidewalks for me to push a stroller. And I wanted to garden. So we started house hunting and soon realized we couldn’t afford anything in Maryland, and that just across the border in PA would be a better place to look.

What You Can Do- Simple Steps to Take

In a nutshell, these are the steps you can take to either: help prevent a monetary loss, mitigate the effects of a loss, or to start to pick up the pieces after suffering losing value on your property.

  • Live under your means. Don’t live a lifestyle that uses up all of your paychecks.
  • When you have extra money, instead of going on a vacation put it on your mortgage principal.
  • Understand that by paying off your mortgage early, you will pay less interest on the loan. You will be saving money– putting money in your pocket every time you put money on the mortgage.
  • If the opportunity comes to refinance at a lower interest rate, take it– even though it might mean paying a big chunk right then. If you delay, it will only delay the inevitable and cause you to pay more interest in the long run.

Well, it was hard to find a property in Pennsylvania, either. Until we came upon a house for sale…. a plain, cookie cutter rancher. There was a catch though. It wasn’t a normal sale. It was a short sale. Turns out (and our realtor told us this right off) a short sale is anything but short. After 6 months of back and forth with the bank, we finally had a deal. And it did seem like a great deal.

There was a huge fenced backyard, and the price was about $25,000 less than my husband had paid for the condo 7 years earlier. Wow! Imagine that!

So what to do with the condo?

condo dining room makeover

I wanted to rent it out, so we didn’t have to take that big loss from the crash. My husband wanted to sell it. We tried to rent it out and it fell through. Then a buyer appeared out of nowhere so we sold it.

We sold the condo for $50,000 less than my husband had bought it for. It had lost one third of the value. Can you imagine if that happened to you? How did we recover from that kind of loss?

I can tell you that we didn’t have $50,000 sitting in the bank. And we didn’t have any relatives give us any money.

What we had done– by paying off little bits here and there over four and a half years, and by refinancing— that had brought us to breaking even when the condo sold. We hadn’t known how it would all play out, but we were thankful that we had paid extra on the mortgage. Because we weren’t upside down at settlement, owing extra to break even.

So it was basically 2 things: 1. Paying off little amounts as we could add extra to the mortgage payments and 2. Refinancing/ paying a big chunk in the interim when it wasn’t crucial– when we weren’t trying to buy another house.

We were thankful to be starting at the rancher with a clean slate. Starting over again at the beginning, but at least not upside down. And the rancher was plain– so we thought we could make improvements and add value with sweat equity.

Also, we didn’t plan for the rancher to be a starter home. We thought it would be just right forever. We saw people downsizing, and we would say– oh we skipped that phase– we’re just downsizing from the start– why go through all that hassle?!

You know that phrase… “little did they know…..”

So we started life at the rancher, and didn’t look back. In fact, it was only just recently that I remembered about this crazy huge loss.

Q: What was our income like? A: Without completely opening up our finances, remember that my husband had bought the condo planning to pay the mortgage on his income alone. Shortly before we were married, I was offered a new part time well paying job (that I’m very thankful to still have) in addition to my piano teaching income. We didn’t take lavish vacations, and our tastes were simple. My church handed down (nice!) clothes for the kids. Diapers and formula were one of our biggest expenses….

Questions? I’d love to answer them. By the way— here’s a similar condo that sold just a few months ago for less than what my husband paid. Eighteen years later, and those condos are barely recovered from those crazy high prices!

Thank you for Sharing!

Similar Posts

2 Comments

  1. I love the idea of paying off our mortgage early and saving money on interest! I definitely with this was talked about more to younger home buyers. Thanks so much for sharing from your experience.

Leave a Reply

Your email address will not be published. Required fields are marked *