When I moved from Seattle to Santa Barbara, California, 18 months ago, I knew it was a bad financial decision. But it was a good life decision.
My husband and I wanted to raise our kids in Santa Barbara. I had attended the University of California at Santa Barbara and lived there for another stint in my mid-20s; I describe living there as a permanent vacation that’s interrupted by work. It’s building sandcastles in January and walking the kids to school every day of the year.
The only obstacle: sky-high housing costs
For Oprah or people who happen to be British royalty, the cost of buying a home is pocket change. For the rest of us, it’s a challenge. Santa Barbara is one of the most expensive cities in the U.S., with a median home-sale price of nearly $2 million. And Goleta, the small city adjacent to Santa Barbara that’s home to many of the area’s non-celebrities, is almost as pricey.
Of course, homes in Seattle, where we were living before, aren’t exactly cheap. Amazon plus Microsoft plus tech workers with stock options equals high prices. The typical home in Seattle goes for nearly $900,000. My husband and I owned a home in Mill Creek, a Seattle suburb.
We had purchased the Mill Creek home for $777,000 in 2020, in the midst of the pandemic homebuying boom, with a 2.9 percent mortgage rate. Our monthly mortgage payment was $3,800, much lower than it would have been with today’s 6 percent-plus rates.
Moving to California doubled our mortgage payment
We were prime candidates to stay put in that Seattle-area house forever, locked in by a low mortgage rate. But we wanted our kids’ hometown to be based on where we’d be happiest, not on the economy.
So in early 2024, when rates were around 6.9 percent, we sold. Our sights were set on moving to Santa Barbara before our son started school (one financial benefit of California: free pre-K for all 4-year-olds). We sold our Mill Creek house for $1,450,000; we were lucky that home values had soared.
That equity enabled us to afford a home in the Santa Barbara area when average rates were nearly 7 percent. One of my BFFs, a local agent, found us a small, off-market fixer-upper in Goleta close to a desirable elementary school. It was a total gut job; the house hadn’t been renovated since it was built in 1960, and it came complete with pink and green shag carpets.
Still, the sellers wanted $1.5 million.
Our original mortgage: 30 years, 7.35%, $8,500 per month
We negotiated the price down to $1,324,000 because the inspection, as expected, uncovered a lot of issues. That was still a wild price for a somewhat small house with a broken foundation, 40-year-old appliances, and a rotten avocado tree. But it was our very own house in Santa Barbara. Worth it.
We closed in April 2024 with a monthly payment of $8,500. We put down 20 percent using the equity from our Seattle-area sale. The best 30-year rate we could get was 7.35 percent; we took it with an eye toward eventually refinancing.
We also paid roughly $200,000 to renovate the house (also using proceeds from our prior home sale), ditching the green shag carpet and making it livable for our family. We were fortunate that my father-in-law and husband could do almost all the labor themselves.
We moved in September 2024, just in time for our son to start transitional kindergarten (TK). Santa Barbara is sunny and vibrant and neighborly, and there’s always saltwater in the air. We walk our kids to school every morning, we boogie board, and watching their baseball games is a sun-soaked sideline party.
The only thing our kids complain about is going to the beach and pool too often. The only thing the adults complain about: our mortgage payment. We make tradeoffs to live here: a strict no-nail-salon policy, for example.
Our refinanced mortgage: 20 years, 6.2%, $8,800 per month (and $300K in total savings)
By September 2025, rates had declined to 6.3 percent. Plus, I’d improved my credit score by taking the extremely adult steps of buying a bunch of things with my credit card, paying them off immediately and adding my name to my dad’s credit card (credit scores aren’t fair).
Our mortgage loan had a balance of $1,042,000. Switching to a 6.3 percent rate from a 7.35 percent rate would bring our monthly payment down to about $7,700.
But then we calculated how much interest we would pay over the course of our 30-year loan. It came out to nearly $1 million on a home we bought for $1,324,000. Using a 30-year mortgage nearly doubled our housing costs, so we investigated a 20-year mortgage.
We had 2 choices
Option 1: Refinance into a new 30-year mortgage with a 6.3 percent rate, pay $7,700 per month and pay about $1 million in interest over three decades.
Option 2: Refinance into a 20-year mortgage with a 6.2 percent rate, pay $8,800 per month ($300 more than our prior payment) and pay about $700,000 in interest over two decades.
Option 2 meant we’d own the house free and clear 10 years sooner, and save about $300,000 in interest, which could pay for … about half of a condo in Santa Barbara. But $300,000 is more than zero.
We chose Option 2, the 20-year mortgage. The cost to refinance was $12,000, which we rolled into the loan. If rates drop again, we’ll refinance again.
Refinancing often makes financial sense, even when rates aren’t plummeting. I won’t argue that buying a small fixer-upper for nearly $1.5 million makes financial sense, but now we’ll own the house free and clear in 2045 instead of 2055.
And we get to live rich lives. Not rich with money, of course, because lots of that goes to our mortgage. Instead, it’s rich with Santa Barbara vibes.
In April, we’ll explore money and finance in a special theme month. We’ll feature conversations with industry leaders on where the mortgage market is headed and how alternative financial products are evolving to meet today’s buyers’ needs.
Dana Anderson is the principal data journalist at Redfin. Connect with her on LinkedIn.
