A few lessons from “Frozen” for homebuyers

I had the pleasure of watching “Frozen” this weekend, and like most animated Disney features, I really enjoyed it. If you haven’t seen it, I would encourage you to check it out. The advent of pay per view cable and satellite TV has given those of us without small children the opportunity to see the films we would have taken our kids to in a different time, and you can do it without showing up in a theater feeling like the creepy adult in a room full of adolescents and toddlers.

One of things that happens in the film surrounds little sister, Anna. Prior to the beginning of a ball, she meets a handsome prince. During the ball, they link up again and she is smitten. Before the ball is over, they decide to get married, and it’s that decision that sets the rest of the movie in motion. When Anna tells her sister about her wedding plans, Queen Elsa refuses to let her. The events following send Elsa off into the mountains to live as a recluse snow queen.

While on a search to find her sister, Anna runs into an ice salesman who guides her path to Elsa. In one of the early conversations they have, Anna confesses to the ruggedly handsome Kristoff that she is in love and to be married. She relates the story, and Kristoff is appalled that she is going to marry a man she just met. He brings it up over and over. This is where I leave the movie.

How many home buyers want to buy the first home they see? In my experience, it’s actually a small number. I would say it’s in the 10-20% range. The one thing they say over and over is, “Is it wrong to buy the first house you look at?” I would respond, “Not necessarily, but it really depends.”

Depends on what?

  • Does the house meet your needs?
  • Does the house meet your location choice?
  • Does the house correspond to your financial abilities?
  • Does the house offer a good deal overall?
  • Is the house in a condition that meets your approval?
  • Have you done your homework online to see what else it out there?
  • Have you listed the pros and cons of the house as compared to looking at others?
  • Are you sure you’re not making a snap decision because the market is too competitive and you’re afraid you won’t be able to buy any house?
  • What would be wrong with buying the first house you looked at if it turns out to be what you wanted?

I sold a property to a client a number of years ago who looked at 60 houses. He finally bought the first one he looked at. Thank goodness the market was moving slower then. He had the privilege of looping back a few weeks later, but in a hot market that isn’t always possible.

Buying a house should be about meeting your needs. First, fifth, tenth house, there is no set number of views that make one a better decision than another one. Overall, it’s all about meeting your needs. In Anna’s case, the first husband candidate didn’t work out. Fortunately, she found out before she said, “I do.” In her case, the second choice was a better choice.

It’s not the number of houses you look at. It’s the ones that meet your criteria. If you’re just looking at houses with no criteria, you may just as likely become “Frozen” without any sense of right and wrong. Decide what you want, weigh the options and buy based upon an intelligent choice.

A few lessons from “Frozen” for homebuyers


Reduce your mortgage by pre-paying principal and eliminate interest.

Homeowners know that a mortgage is a great way to buy a house.  But, too many don’t realize just how much a mortgage can run the price of house up over the course of a loan.

If I told you that I would sell you a $200,000 house for $364,813.42 you would never do it, but a 30 year mortgage can run the purchase price of a house up $164,813.42 in interest at 4.5% over a 30 year mortgage.

There are ways to cut that number that are simple and within reach.  Anytime you take out a mortgage, make sure you have the privilege of pre-paying principal without penalties.  Let me show you how this works.

Let’s start with a $200,000 mortgage with the first payment beginning January 1st.  Interest is loaded on the front of your mortgage, so your early payments are predominately interest.  Let me give you an example.  Payment one is $1013.37.  Of that fee, only $263.37 is paid on the principal.  The remaining $750.00 is interest.  On month 2, your second payment is $1013.37 of which $264.36 is principal and $749.01 is interest.

So, in two months, you have paid $527.73 in principal and $1499.01 in interest.  Now, if you add the principal of the second month with your first payment you can skip the interest onpayment two.  So, on January 1 you would pay $1277.73.  That eliminates $749.01 in interest from your loan.  

In February, you would pay payment 3.  Payment 2 has been paid with the January payment – minus the interest which you won’t ever pay.  In February, if you paid the principal of month 4, $266.34, you can skip the interest of $747.03.  In two payments, you have reduced your overall mortgage costs by $1496.04 in interest.  If you repeat that every month throughout your mortgage, you can radically cut the overall interest costs of your mortgage.  There is another way to pay your mortgage off early and reduce the overall interest.  I’ll show that in the next blog.