No Mortgage

January 20, 2013, by Ken Jorgustin

no-mortgage

How would you like to have a house with no mortgage? While you don’t have to be Living in a Tiny Home – With No Mortgage to actually have a home with no mortgage, you may be surprised with the square footage that you could be comfortable with, and the advantages that go along with not having a large debt over your head.

Modern survival includes figuring out ways to get out of debt, to get out from under the oppressive system that tries to keep you in debt, and ultimately to have NO MORTGAGE.

As a society, I believe we have passed the point of excess and living ‘high on the hog’ so to speak. As we struggle to deal with our debt, we are faced with downsizing and living within our means. Except for the small percentage who can really afford a large home or McMansion, the vast majority of everyone else should really consider buying a home such that they could realistically have no mortgage after a time (a time much shorter than 30 years).

The median and average square feet of a new single family house in the United States peaked during 2007 just prior to the financial crisis. The median (same number of houses above and below) square footage was 2,277 and the average was 2,521 according to data collected by the U.S. government (census.gov).

The most recent data from 2010 shows the median at 2,169 and the average at 2,392 square feet for new single family homes. Now, in 2013, those numbers have likely shrunk a little more…

Now consider this… A home of 2,000 square feet or more is a very large home compared to generations gone by. Naturally, the number of people in the household plays a significant role into the equation of what is acceptable or comfortable. But here’s the thing… you PAY for the big house. It’s a big mortgage, and it’s for a long time.

The realities and consequences are somewhat hidden in that today’s mortgage rates are SO LOW and the monthly payments are much less than what they were not that long ago. They are at record lows. This is a potential trap because you are potentially able to take on a bigger loan because the payments are less.

Whether you realize it today or not, debt is one of the biggest anchors or chains holding you down, keeping you from real freedom. It is a freedom that is unimaginable to many, but it can be yours. All you need to do is to be smart. While debt is often a necessary part of business and enterprise, when it comes to personal debt it is usually a bad thing. The banking system of course wants you in debt, because that is how they make their money (the interest on your loan). The problem is, the marketing is so intense to keep you buying bigger and better, that it is difficult to overcome.

If you want no mortgage, you have to sacrifice your big desires and convince yourself that the long term result will be better for you (living debt free).

 

How To Have No Mortgage

If you haven’t purchased a house yet, good! Take your time to consider choosing a home that is far less than your ‘maximum’ amount that you can borrow. So many people go for the max. Probably not the best idea if you want to become debt free in a shorter period of time.

There are many, many homes on the market today due to the real estate downturn. Seriously consider buying a smaller and older home. A challenge is to convince your partner (if you have one) that it is a good idea to live lower than your means and buy something smaller for less money.

Take a 15 year loan instead of a 30 year loan. This makes a HUGE difference in what you will pay (and save) over time… Debt free in 15 years while you still have significant life left, will be one of the best decisions you have made.

If you are already straddled with a big loan in a big house, consider selling it and downsizing. This may be difficult if you are underwater in your mortgage though, but you should check it out anyway just in case a professional can pull it off for you.

Look into refinancing and compare your existing mortgage rate with what you could get today. You need good credit to get the best rates. Use that extra money to pay down your loan until you have no mortgage.

It is also possible to save enough cash to buy a home. This may sound unachievable, but it is possible if you put your mind to it and sacrifice for a number of years. If you have a halfway decent paying job, you could rent on the cheap, don’t spend excessively, and save save save. Granted, today you basically get zero interest for saving, but on the other hand with a mortgage you’re paying many hundreds a month on interest. If you could save $200 (or $500) a week, $10K ($26K) a year, how many years do you need to save in order to pay cash for a small house and be with no mortgage? Sure, housing prices depend on where you live, and it will take years, but you get the idea. So long as you are not already saddled with debt to your limit, you could pull this off. It would be difficult, but possible, although probably not for everyone.

Move far away if the prices are far less there. This will depend on your job opportunities, however consider relocating, or commuting further to enable you to live in a less costly region. Instead of buying a bigger house in the urban-rural market, buy a cheaper house and set your goals on becoming debt free with no mortgage.

 

This is modern survival, figuring out ways to get out of debt, to get out from under the oppressive system that tries to keep you in debt, and to have NO MORTGAGE. It will take some sacrifice, some time, and some changes in your way of life, but you can do it if you want to. Buying a house will be the biggest purchase of your life. Be smart about it.

 

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