Remember when 14.5 percent was a good mortgage rate?
Buying a first home in the early 1980s was not for the faint of heart. Personally, I’m reminded of the opening in “A Tale of Two Cities,” when Charles Dickens famously wrote, “It was the best of times. It was the worst of times.”
The best? I was engaged to the great love of my life, my husband now of 30-plus years. And because my new fashion/trend-forecasting business was proving so successful, we had saved up enough money to pay for both our wedding (they cost a lot less in those days) and a 20 percent down payment on a condominium in Brookline.
The worst? Known to all as “Marvelous Marv,” my charismatic, bon vivant dad unexpectedly died of a heart attack at the age of 61.
All of a sudden, researching wedding venues and hunting for an apartment became a painful reminder of places where he wouldn’t be.
Then, adding to that pain, were the mortgage rates.
Strange as it may seem to compare a loved one’s death to an out-of-control economy, those two events will always be inextricably linked for me. We hadn’t the faintest idea of how to navigate the most significant financial investment of our lives. As a CPA and businessman, my father was always just a phone call away when we needed advice — which he loved giving.
The economy had its own pain to inflict. When we entered the real estate market in 1981, the 30-year-fixed mortgage rate was over 18 percent. Homebuyers today, just keep that number in mind as you struggle to swallow the news that 4 percent, 30-year fixed mortgages might rise to 5 percent, or, gulp, higher. To put that 18 percent in even greater perspective, the life-of-the-loan interest payment was enough to buy a second home at the same price free and clear.
And we weren’t even buying a house. In 1981, a two-bedroom condominium in Brookline cost about $85,000. The average price of a house in the United States at that time was $82,500. “An apartment will never appreciate,” we were told. “It’s a lousy investment.” Thankfully, we ignored that bit of sage advice, along with a few other suggestions.
We knew exactly what we wanted: old-world charm, large open spaces, an outdoor porch, and a fireplace — which neither of us ever figured how to keep lit, and so we never used it. The location needed to be in an attractive neighborhood within walking distance of Coolidge Corner, and we were prepared to wait as long as it took to find just the right place.
I remember first walking into it. Our broker had warned us never to express emotion in front of the owners. “You don’t want them to think you love the place or they’ll keep upping the asking price,” she advised.
I can’t tell you how many awful apartments we had looked at before finding the right one. These owners, a lovely couple with a newborn baby, were in the large front hall to greet us for a walk-through. Within one minute, I had told the wife that I loved everything about the apartment — the sunny large rooms, the gracious layout, the charming way she had decorated it — on and on I went. And then I played with her baby. My agent was aghast.
We put in a bid immediately, but another couple offered a little more. I was crushed. We had gone as high as we could go.
But then, incredibly, the wife decided that despite our lower offer she wanted us to have her home because I loved it as much as she did. (No doubt leaving my formerly aghast agent stunned.) By the time we closed on the place, the interest rate had fallen to a then-almost-reasonable 14.5 percent! Marvelous Marv would have loved that part of the story, most of all.