In 2004, I had a house in Superior Township, Mich. There were many loan packages I had to choose from but I chose a package that avoided wasted money on mortgage insurance and would adjust over the long term. It was a 15-year mortgage. I knew that interest rates could swing up or down but that wasn’t my concern at the time. My primary concern at the time was how would I pay for my home during the short-term, and I was comfortable with the payment Pulte homes provided.
As the house took shape, I visited everyday until finally I was able to move in. I was excited. I had heard all the stories about people buying homes they couldn’t afford but that didn’t concern me. I was a single man with no children earning more than $100,000 a year.
My credit rating was more than 720. I had thousands in the bank. What did I care about interest rates? My biggest concern was who was I going to share my life with. But as we all know concerns change. I paid the initial costs of having a house built. I purchased the grass, furniture, window treatments, and sprinklers and had the basement finished. I spent thousands over and above the cost of moving into the home and then paid those debts off. Afterward, my financial concern was how the rates on my adjustable rate mortgage would change. I was somewhat worried but not too worried. Why? Well when I bought my house, I set up a phone conference. During the mortgage negotiations I had a mortgage broker on the phone, a real estate broker and an attorney. I had the financing organization answer all their questions. I knew I got a good deal. In time, this would bear itself out.
In September 2009, I called my mortgage organization. I paid my mortgage consistently and slowly my credit score went back up. Unknown to most people, when you buy a $250,000 house your credit score drops. But when you pay your mortgage on time, it slowly goes back up. In September 2009, I had a 705 as a credit score so I was prepared to negotiate or refinance if necessary. I held my breath. I spoke with the representative and inquired about what my new payment would be. I could feel myself starting to sweat. She put me on hold. The silence was unbearable. Finally she came back with my new monthly payment. The amount I paid each month dropped by $150.
I couldn’t believe it. I just sat stunned for a minute. I thanked the Bank of America representative and got off the phone. Then I ran through my home screaming. I thanked Alan Greenspan. I thanked Ben Bernake. I thanked George Bush. I thanked Barack Obama. Although I don’t know why I thanked Greenspan, he’d been out of there for years. But I was grateful to every part of the interest rate machine that day. Who can argue with a lower mortgage payment? I know I can’t.