Time + consistency = financial success by Jim Porter 11.15.24

Time + consistency = financial success

by Jim Porter? 11.15.24

Thirty years ago, Ted and Alice bought a 10,000-square-foot lot in a town north of Santa Rosa, called Windsor for $90,000. He was a rookie cop and she was a newly licensed nurse.

It was late 1994 and the market was soft. They put $20,000 down, which was $5,000 from their savings and a $15,000 loan from grandpa, and the motivated seller carried a $70,000 note at 12% with interest-only payments of $700 per month and a balloon payment due in five years.

Over the next four years, Ted and Alice worked a ton of overtime and paid off the $70,000 loan. In 1999, they built a 2,000-square-foot modest custom home using something called a one-time close construction loan, and when the dust settled and they moved into their dream home, they had a $350,000 mortgage at 8% with a $2,800 mortgage payment including taxes and insurance.

This payment was twice as much as their rent but their incomes had nearly doubled since they were rookies and newlyweds in 1994, so things were looking good.

In 2001, rates went down and they refinanced down to 5.75% on a new 30-year loan. Rates dropped again in 2003 and this time they refinanced on a 20-year loan at 4.50%.

Ted retired this year after 30 years on the force with a pension of $8,000 per month and $300,000 in his 401(k). Alice is still happily working 32 hours per week making $130,000 per year sitting on her growing $700,000 401(k). Their $1 million home is free and clear and they even paid back grandpa 20 years ago, which made grandpa very proud, so much so, that he left Ted and Alice $150,000 when he died in 2019.

This success story did not include any lottery ticket winners and both Ted and Alice grew up very middle class and started with nothing other than a loan from grandpa. Consistent hard work over time equals ?success.

Jim Porter, NMLS No. 276412, is the branch manager and senior loan adviser of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.