Post # 1
I just wanted to share with someone my good news 🙂 Me and FH will be able to pay cash for our first home in ~6-8yrs (less if I didn’t need another 3 yrs to pay off my student loans).
So exciting! I didn’t really think it could be done. People make it seem as though its unattainable, but if you work at it, it can be done. But, you have to buy within your means!
Ok. Rant time 🙂 We are both debt averse and hate how the “system” is set up to keep you enslaved in debt for life. Mortgage, car loans, credit card debt, etc. People no longer wait to save up for what they want. We are so ingrained to borrow money for everything to get it faster. It hurts us so much in the long run.
Having a mortgage does not mean you own your home! As soon as you stop those payments it can be taken from you and your financial life will be in ruins. (Unfortunately, unpaid property taxes will have the same affect).
Some would argue that we would be “throwing” money away by renting for the next 6 yrs, but many people spend the first 5+ yrs of their mortgage just paying off interest. How is that not throwing money away!??
FH and I have decided that we want to live w/o the burden of debt on us and I can’t wait! By the time we are 40 & 44 we could have our paychecks to save/invest/spend how we want and peace of mind in case we lose our jobs, get sick, etc. And, when/if we sell – we get all the money to ourselves.
I’m interested to hear your thoughts.
Edit: I should also mention that we wouldn’t have a 20% downpayment saved until year 4 anyway, so we couldn’t buy sooner than that. Also, we won’t live in a city we want to settle in for ~2yrs. We also plan to remain DINKs.
Post # 3
Here’s the thing that puzzles me: part of your objection to a mortgage is that you spend the first 5+ years paying off interest, yet you’re going to spend 6-8 years paying someone else’s mortgage by renting.
We chose to go from living at home to buying our homes with a mortgage because it worked out cheaper than renting and gave us a home that is a lot closer to being our own than if we rented.
At 26, we could call ourselves “home owners” and we can pay extra on our mortgage (up to 125% over our monthly payments) so that it is paid off sooner. I couldn’t cope with renting long-term, particularly after seeing how many of my friends and acquaintances have ended up being given a month’s notice to leave by their landlords!
I don’t think that I’m “brainwashed by the banks” but looking at what makes the most financial sense for us.
(For the record, we do have credit cards for the security they offer but pay them off every month and we save when we want to buy something which we can’t afford straight off.)
Post # 4
DH and I have rented for 6+ years. By the time we hopefully buy a house next year, we’ll have paid more than $100k in rent payments. If you’re not looking to buy for another 6-8, you could very well be spending the same amount as we have depending on how much rent is in your area. Now, I don’t see renting as throwing your money away because you’re getting something for it but that still doesn’t change the fact that we’ll have spent a HUGE amont of money paying someone else’s mortgage.
If you ask me, it would make more sense to buy the mortgaged house and pay it off as soon as possible so that your money is still going towards something. If you continue to rent for 6-8 years, you will be throwing your money away. Being mortgage is free is amazing if you can swing it but the way you’re going about it doesn’t seem like the wisest decision.
Post # 5
Seriously? Anyone who has a mortgage is “brainwashed by the banks”?
Post # 6
You can have the best of both worlds. There is nor reason that you can’t still save money to pay off the mortgage while you are living in a house you have already purchased.
Where I live rents are much higher than my mortgage payments, so if you can afford the down payment, it only makes sense to buy.
Post # 7
In the US, there’s tax benefits to making those interest-heavy payments. If you really can pay the house off that fast, I’d buy now and at least enjoy some of that tax benefit, which is going to be larger than the interest you’d accrue on that money in a stable savings account in 4-8 years.
Post # 8
Have you actually put together a proper plan? Is the plan faultless, for example will either of you become ill in the next few years, will you become pregnant, will you both still have jobs?
This sounds like some crazy scheme that some smooth talking con man has sold you to be honest.
Post # 9
@MissBoPeep: (I was trying to drum up interest in the thread)
Post # 10
@ShortnSweet: “I was trying to drum up interest.”
Post # 11
@ShortnSweet: while it all sounds good in theory.. I’d have to agree with pp’s renting is WAY more expensive than paying mortgage. Also, I’d be afraid that the 6-8 years would turn into 10+. life doesn’t always go as planned and you may have to fork out a more than a couple grand unexpectedly over the course of those 6-9 years. I’d rather be in my own house and save up money on the side to cover my mortgage in case something happens than to be renting and saving up to buy a house in full cash.
Post # 12
@ShortnSweet: Drum up interest for what?
Post # 13
It’s not impossible to pay cash and my father was able to do it (more than once) but he knew what was better for him and his finances and it was to have a short mortgage.
He put a hefty down payment and paid off his house in a few years. He then gave that house to his parents and bought another one in the same way. He was able to do it by paying cash (business was booming back in early 2000s, sigh) but he would not have the benefits of some tax breaks and the bump to his credit if he had not taken up a small mortgage (less than 10 years)
Post # 14
Where we live, our rent is about $200-$350 more dollars than a mortgage payment (including insurance and taxes), so to us it’s very wasteful to pay rent each month. I’d rather get a mortgage and put this money towards something thats mine rather than throwing it away each month. You said you don’t own your home with a mortgage, which is true I suppose but at least with the money your paying each month its going towards something that IS going to be yours, rather than a rent payment thats going towards nothing.
Post # 15
Why don’t you look at shorter loans (short mortgage) like one of the pp’s said her father did? that way it’s kind of the best of both worlds.
Edit: also, If I could, I’d totally pounce on buying a house right now. The market is still trying to recover so you could get a house for a REALLY REALLY good price right now. Not sure we will still be able to say that in 8 years.
Post # 16
@ShortnSweet: Why not buy a house now? And pay rediculous amounts of extra payments similar to what you’d be trying to put away in savings for a house and pay off the mortgage in 6-8 years, or even sooner since you would be paying some principle iwth your regular mortgage payments instead of just paying rent?