Paying off mortgage and other debts is not an easy task and it can cause serious problems sometimes. You will agree with me that it is very difficult for a person of limited income to make payments for debt every month. Buying home without a mortgage may look like a dream to many people but it is not like that. When I had to buy a home, I thought the same and the only situation for me to buy a home at that time was to buy it on a mortgage but now I have found the ways through which you can buy a home without a mortgage. Today I am going to share some of these tips with you, so that you can follow the tips and do not end up buying a home on a mortgage. Don’t worry, it is all legit. So let’s start,
How you can do this?
The most important thing right now is that how you can buy a home without taking a mortgage and to explain this, let me give you an example of a couple named Josh and Kate, they are one of my friends, who bought a home without getting mortgage. If I would have to explain all the story in single line then I would say that, they did that only by living frugal.
This couple had an average income of $80,000 per year and they were living in a rented apartment. Their dream was to buy a home but they did not want to buy it on a mortgage as they did not want to pay interest and it was difficult for them to make payments every month. So they made a five year plan to save an amount of money from which they could buy a home. Here they had to save a $150,000 to buy a home that means they had to save $35,000 in a year.
To save $30,000 for a year, the couple decided to live a frugal life, they started to make efforts through which they could save money and they tried everything that could save them a dollar. They shifted to cheaper apartment in which they have to pay a lower rent then the previous one. They planned for the cheapest vacation and tried to stay at home on the weekends. They started the challenge everything budget in which they made a living on the lowest possible amount. They tried everything that a frugal person does and by this at the end of the 5th year they completed their goal and saved $150,000.
One of the things that this couple did is that they put their savings in high yield savings account, through which they increased the amount of money they saved by some margins. You can also do the same because the extra amount would be a gift for you.
Thus by that at a very young age, my friend Josh and his wife Kate bought a home on cash and fulfilled their dream at a very young age.
Are you thinking that living with $50,000 in a year is difficult, if so then you are wrong because I know a lot of families that have lived with even a less amount as $40,000 in a year. By keeping the cost of rent, food and utilities at the lowest possible and taking entertainment cost at the lowest by finding ways for free entertainment. You can easily make a living for $40,000 and even for less if you go super frugal and that is also on cards.
Why to Pay Cash instead of Mortgage?
There are many benefits of paying cash for your home instead of taking mortgage, although it sounds crazy because almost everyone takes mortgage to buy a home but have you ever thought about the amount of money that you will have to pay in the form of interest for 20 to 30 years depending upon the time period of your mortgage? Let’s calculate, suppose you borrowed $200,000 at an interest rate of 4.2% for a time period of 20 years. In this case, you will have to pay $8,600 extra in each year and for 20 years that amount will be $172,000. This is a very big amount that you will have to pay so that make the mortgage calculations clear that if you pay cash for your home, you will save a very big amount of money that otherwise you will have to pay in the form of interest.
Now think of that, what you will do with that $8,600 that you are savings? I am sure that I would be making a tour to the Europe every year for my vacations. You can also put that savings in to your savings or retirement account or you can even start a business. This would help you to make passive income sources and you will also be able to retire earlier than you have ever thought of.
If you already have a mortgage than do not worry because I will also give you some advice through which you can pay off your debt earlier than you have thought.
Pay your Mortgage Quickly
If you already have a mortgage than the only way to save money is to pay it fast because by this you will be able to save money that you have to pay in the form of interest. I have wrote down some of the ideas that would help you to pay off debt quickly,
One of the first thing you should do is that you should cut down all your unnecessary expenses. Living frugal will help you in every way, you can save money on every category of your budget. For example, you can reduce your grocery costs by buying on sales, reduce electricity cost by using less electricity and walk to office to reduce transport cost. Go through your budget closely and watch is there any space where you can save a dollar.
Increase Your Income
One of the best method to pay off mortgage quickly is to increase your income and pay more money to your lender every month. There are many side hustles that you can try to increase the amount of money you earn. A side hustle may be a job in which you have to deliver pizzas, washing dishes etc.
Other than getting a job, you can freelance your skills, you can offer your services like mowing lawns and becoming a handyman. You can also offer your services of babysitting or pet sitting. Apart from that you can also do task on people’s and companies behalf on sites like TaskRabbit. If you have a car, you can drive it with Lyft and if you have vacant space, you can rent it out on AirBnb.
If you are paying a high interest rate, then there is a higher chance that you can save money by refinancing your mortgage. There are many online companies and banks that will help you to get a lower interest rate than you are already paying. This simple trick can save you thousands of dollars, so you should contact your loan officers in order to save the most money.
So these are some of the methods through which you can buy a home without a mortgage and if you have a mortgage you can pay it off quickly. Now buying a home without a mortgage is not a dream and you can do that. It would take some planning, hard work and a strong determination on your path.
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