How to Buy Your Home Outright to Save Money
In some cases, this is a more realistic goal than you might realize, if you’re willing to put forth the effort to make it happen!
Of course, you may not be able to afford a sprawling Tudor mansion set against an English hillside.
On the other hand, a suitable ranch style home that needs a little attention or a modular home on a beautiful lot may be well within your range.
If you purchase a home outright and put in the necessary improvements and repairs, you can always sell it for a profit later on.
You can save tens of thousands of dollars in mortgage interest by paying cash for a home. You can see the benefit of purchasing a home outright, but is this an option that’s right for you? Consider these benefits for purchasing a home outright, rather than through a lender:
No more mortgage payments
How wonderful would it be to know you’ll never have to make another mortgage payment? Once you’re home is paid for, the only expenses you’ll incur are home insurance, property taxes, maintenance fees, and perhaps homeowners’ association dues in certain situations.
- Consider being able to bank your average monthly payment of between $1,000 and $2,500 per month, to use for other obligations, expenses, or savings accounts.
Full profit is a reality
If the house is paid for and you decide to sell, you’ll be walking away with pure profit due to the equity you acquired through upgrades, renovations, and appreciation.
- When you sell a financed home, the bank gets paid first. Since the first few years of mortgage payments went mostly toward interest rather than principal, you’ll be left with little or no profit for your investment.
Greater financial freedom
Spend a few years without high mortgage payments in your budget and you’ll discover financial options that wouldn’t be open to you if you were still paying for your home.
- Spur-of-the-moment vacations or other luxuries might now become a reality.
- In another scenario, you might continue to living within your means and save a considerable amount of money for early retirement. With minimal monthly expenses over the next 10 to 20 years, the savings will be substantial.
Saving to Purchase Your Home
If you’re fortunate enough to have two incomes coming into your household, you can learn how to live on just one income and completely bank the other income into your savings. Doing this enables you to turn your dream of owning your home outright into a reality. Of course, you’ll need to trim your monthly expenses down to bare necessities to make this possible.
One option is to move in with relatives for a few years, in order to eliminate the expense of rent and utilities entirely. In some cases, parents or siblings are more than willing to welcome you into their homes, allowing them to spend more time with you while you save for a worthwhile financial goal.
If moving into your grandparent’s house doesn’t sound like such a good idea, employ these tips to help slim down your expenses and increase your savings:
- Rent out one or two bedrooms in your home to a young professional or responsible college student
- Use coupons to reduce your weekly grocery bill
- Take on a second job
- Sell your car, then use half of the proceeds to purchase an older vehicle outright and put the other half towards savings
- Move into a more sensible, smaller, or less expensive home
- Save your tax refunds over time
- Choose to send your children to public school rather than private
- Eliminate or reduce monthly expenses like cable TV and internet service
- Sell high-value collectibles
- Trade in your monthly cell phone bill for a prepaid phone
- Shop thrift stores for clothing instead of retail stores
- When you near your goal, sell the home you currently own to make up the difference in price
- Move to an area of town where renting is less expensive
- Visit tourist attractions in your own area and apply your yearly vacation fund towards your savings
Implementing some of these ideas might be a little difficult, but they’ll be worth it in the end. Once you’ve set and achieved a savings goal, you can wave goodbye to high interest loans and empty rental payments by purchasing a home outright.