Own
Your Home, Mortgage Free! Here Is My Story.
How I Went From Being Flat Broke to Owning My Own Home,
Mortgage Free, in Just 5 Years.
< Why Would You Want
to Buy a House for Cash? * Step
One: Start Saving for a Down Payment >
What Does it Take to Become Mortgage-Free?
If you live in an area where the average selling price of
a home is over $250,000, and you spend every dime you make
every month just making ends meet, you may think that buying
a home for cash is an impossible dream that can be achieved
only by the very rich.
This report will show you how I went from flat broke to owning
my own home, mortgage-free, in only five years. You may be
able to do the same thing I did. In fact, if your financial
situation is better than mine was five years ago, you may
be able to skip a step or two and reach your goals faster
than I did.
Here's the basic outline of the plan:
1. You start putting as much money as you can in the bank
now, so you can save for a down payment on a small, inexpensive
house. I did this by keeping my living costs as low as possible.
I also started a small home business for extra income. A second,
part-time job would have worked, too.
2. As soon as you have a few thousand dollars saved up, you
stop paying rent and buy the cheapest house you can find in
an area that is livable or quickly improving. You look for
a house with cosmetic problems, but you don't buy a true fixer.
3. You make the cosmetic improvements and updates that make
your house look great without costing a lot of money, and
then resell it to take out the equity. You'll want to hold
the house for at least two years so you don't pay capital
gains when you sell.
4. You sell the first house so you can take out the equity
for your next home.
5. After your first house sells you use the equity to buy
your next home, mortgage-free. To do that, you may need to
move to a smaller town or city where houses are still affordable.
Or you may be able to buy a smaller house in the same city
with the proceeds from your first house, and pay cash for
your smaller home.
Some people will want to do steps 2 through 4 more than once,
like my friend Candace did, in order to build enough equity
to buy a nicer home with cash. And some people, like my Uncle
Neil, will make a career of buying, fixing and selling houses
because they enjoy the process too much to stop. But most
people will probably just be happy when they're living in
a home that belongs completely to them, with no liens or mortgages,
and no payments to the bank.
I know this plan seems simple, but there are many things
to consider before you decide to give it a try. If you have
a partner or spouse, you must be aware that living in a house
that is "under construction" can be very hard on
relationships, even if it's only during a few weeks while
rooms are painted. Some families will not be able to agree
to live in less house than they can officially afford, or
may be unwilling to move to a less desirable neighborhood,
even if it's quickly improving. If you don’t both want
a mortgage-free house bad enough to put up with the occasional
problems, this plan may not work for you.
Relationships can also come under considerable strain if
you need to move to a smaller city or town in order to find
a house you can buy for cash. If one of you needs the city's
cultural milieu in order to be happy, a move to a smaller
city is not going to help your marriage. Talk it over before
you embark on any major decisions, so you know in advance
if you can both share the excitement of owning your own home.
If you're single, you may still have reservations because
you'll have to give up much of your free time on the weekends
and after work, first to earn extra income for your first
down payment, and then to improve your first house so it will
resell for a profit. If this will make you feel like you're
sacrificing everything that makes life worth living, this
is obviously not the right plan for you.
There may be other ways to achieve a mortgage-free home –
this just happens to be the way I did it.
I know that saving the money for a down payment can seem
impossible when rents are high and gas and food prices keep
going up, draining the family budget. And even if you already
own a home, you may have years left on your 30-year mortgage,
and selling it would make little sense if your next house
would be just as expensive.
But don't be discouraged. I'm here to testify that it really
is possible to own your own home free and clear – as
long as you're willing to do a few things that many people
would never dream of doing, but which are not all that difficult
to do.
What it takes is a slight change in attitude. It may also
take a few years of frugal living, and you may need to set
your sights on a smaller or less expensive home than the one
you're used to living in. You may also need to move to a less
expensive or more rural community - but true home ownership
is possible. I know, because I've achieved that goal myself,
and I know other people who have followed nearly the same
plan who are now also living in their own homes, mortgage-free.
Six years ago I lived in a studio apartment in Portland,
Oregon. There was barely enough room to turn around in my
dinky flat, but it did have charming old cabinets and woodwork
to make up for the dingy public hallway and the two flights
of stairs I climbed every evening to get up to my front door.
The other benefit of the place was an easy ½ mile
walk to work – a real bonus for someone like me, who
would prefer to walk than drive. And the 23rd
Ave neighborhood was lively and fun to live in.
There were downsides, of course, like the laundry room way
down in the basement, and the need for guests to sit on my
bed when they came to visit, (which would have seemed appropriate
if I was a college student instead of a 51-year old woman).
Unfortunately, after a divorce and a move to a new city, it
was all I could afford.
But now, just a few years later, I'm looking out my home-office
window and watching a purple finch dining at the birdfeeder.
My garden is planted and mulched, a breeze is gently blowing
into my office from my back yard, and when I need a break
I'll take my coffee out to my covered deck and watch the goldfish
in the pond. The last time I looked, a robin was bathing in
the fountain and a butterfly was hovering over the honeysuckle
bush.
 My
house is small and easy to heat, and it has the same period
woodwork that I enjoyed in that tiny studio apartment 5 years
ago. I still live in a neighborhood I enjoy, (but it's in
a different city).
I can easily walk to the bank or library, and I spend many
hours working my new sustainable garden of my "small
city farm."
But instead of paying rent, or even a mortgage, I own my
house free and clear.
 I
know that many people wouldn't dream of living in an 840 square
foot home, as I do; nor would they be willing to leave a "safe"
city job and move to a small town even though the houses are
more affordable and the lots are larger, because jobs and
cultural events may be harder to find.
Other people can’t imagine giving up small temporary
luxuries or taking a second job – or starting a small
business – in order to save the money for their own
home.
The path I chose is obviously not for everyone. It probably
isn't even for most people, at least with current attitudes
and expectations here in the United States.
For me, and for hundreds (and probably thousands) of others,
a "good" job in the city, and the big mortgage that
comes with it, just isn't worth it any more. Living in a small
town where the pace of life is more casual, the streets are
safer and the schools are less crowded is beginning to make
more sense to a lot more people, and not just for Baby Boomers
like me who want a quiet place to retire. If you can imagine
this kind of life, you may be able to get there a lot sooner
than you thought, even if you start from absolutely nothing,
as I did.
Are you convinced that there aren't any "decent"
houses available at affordable prices? Then go to http://www.unitedcountry.com/
and do a few searches. You'll be amazed at how many nice homes
are for sale in beautiful areas for less than $50,000! You
may even find an area where you can pick up a house for under
$25,000, if you have job skills that would help you gain employment
in your new town.
If you live in an area where home prices are still going
through the roof, you probably won't find a house in your
current city that you could ever buy for cash. But within
a few hundred miles the perfect affordable home may be waiting
for you.
When I reached phase 4 of my plan and sold my first house
to recoup the equity, I couldn’t possibly buy a house
mortgage-free if I stayed in the Portland metropolitan area.
However, I was able to stay in Oregon. My new house is over
twice the size of my old one, but cost half as much. If I
wanted to move further away from my family, I could have found
a house for even less, and I could have bought a place with
a few acres attached, if I wanted to. In fact, just this weekend
I saw an ad in the local paper for a fixer in a nearby town
that could be bought for only $20,000!
Owning your own home without a mortgage certainly isn't "free"
living. There are property taxes, of course, and utilities
still cost money. And everybody eats, and gas prices keep
going up…
But the largest item on most peoples' budget has been eliminated
from mine. It took me five years to get here, and I worked
hard for this, but it was worth it.
At the moment, my current home is gaining in value (even
though I haven't done a thing to it yet), simply because the
area has been "discovered" by national magazines
and their readers, as more and more people are escaping from
the hectic city life. The inflation in property values will
increase my net worth far more than if I put the money in
the bank, unless the economy makes a drastic downturn.
And even if the economy does go into a recession sometime
in the future, I won't have to worry about losing my home,
as long as I can continue to pay the property taxes.
I also enjoy gardening, so I'm growing most of the healthy
vegetables I need, which further reduces my dependence on
the national economy – plus the good outdoor exercise
is helping me lose weight and I'm in better shape than I have
in years.
My plan worked for me, but I do recognize that I'm not a
"typical" person. I enjoy change more than some
people do; although I never gamble, I do take risks that others
may be uncomfortable with. People with less money can actually
afford to take more risks, since they have less to lose. And
5 years ago, I had nothing to lose at all.
I did give up many hours of "recreation" in the
evenings and weekends so I could build a small online business
to help pay for my own home. This is the one thing that was
most difficult to explain to friends, who couldn’t understand
why I turned down so many opportunities to "have fun"
on the weekends. People are accustomed to taking the weekends
off and coming home to relax in the evening, so they will
be completely perplexed if you choose to work for yourself
while they're out spending money and socializing.
It's possible to make the extra income in other ways, of
course. You could add money to your savings account by taking
a part-time job, or renting out a room in your current home,
or by reducing your current housing costs by moving to a smaller
house or apartment and putting the extra money in the bank.
None of these steps will seem "normal" to many of
your friends, but once you have your own home without a mortgage,
they will understand your odd behavior – and they may
even start asking you for advice so they can follow in your
footsteps.
I'm also a little weird because I enjoy small remodeling
projects, and I have fun painting walls and renovating a landscape.
I don't mind living in a house where some of the floors are
covered in sawdust, and I don't mind walking around the step-ladders
and paint cans that always seem to be in the middle of the
latest project. These same inconveniences can cause some people
so much stress that it wouldn't be worth it, even for the
opportunity to someday own their own home without a mortgage,
so these folks will need to make big alterations in the plan
to make it work for them.
Minor remodeling skills save me money because I can make
a house look nice without hiring a lot of help. That also
means I can feel comfortable buying a home that needs a little
work, and actually have fun with projects that might be discouraging
to someone who isn't comfortable with a hammer or a paintbrush.
I'm sure that you can still buy a house for cash even if you
never pick up a tool, but it may take longer to reach your
goal.
Can you follow this plan and become mortgage free in 5 years?
To be honest, I have no idea. There is no guarantee of that,
of course. Some people may need much longer than five years,
but others will be able to manage my 5 year plan in only two
years, or even less. But I do know I'm not the only one who
has managed to buy a home without a mortgage.
For instance, Candace, a friend that I've known for years,
has a much more cautious outlook on life than I do. She followed
essentially the same plan I did, but she took things a lot
slower.
You might want to someday put an all-cash offer on a four
bedroom home on a large lot in the "nice" part of
town, with two fireplaces and a view, as Candace just did
this week.
Her new home even has plenty of room for a new studio apartment
in the daylight basement, which will bring her some extra
income for her retirement. The new apartment will cost money
to build, but she'll pay cash for that, too – money
she earned from the recent sale of her city home.
Candace is also a single woman, and though she isn't as old
as I am, I'm pretty sure she's getting AARP invites in the
mail. She has never had a "professional" job, so
there was little left from her monthly paycheck as a data
entry clerk to save up for a new house. Fortunately, she worked
her plan in a slow and methodical way, and now has the opportunity
to own her own beautiful home, rent and mortgage free.
Many other people have done the same thing we did, with their
own custom-designed plans. It doesn't take a special person,
or even special skills. But it does take a certain attitude
that some people just don't have.
To make this work, you need to believe that it's actually
possible to own a home without paying interest to the bank,
and that a mortgage-free life is something worth working for.
I'm meeting more and more people lately who have that attitude
– like the 40-something couple who recently sold me
a used couch. They were getting rid of their furniture so
they could move from a large ranch-style home into a small
house just down the street from their old one.
By making the move to a smaller home when their kids entered
college, they were able to use the equity from their old house
to buy their new home for cash. The new house was small and
needed some work, but the financial security it gave them
was worth it.
Why doesn't everyone work towards getting rid of their mortgage
or monthly rental expense?
Many people just don't realize it's possible. All their friends
either rent the most expensive house or apartment that they
can afford, or they've mortgaged their souls to live in large
houses in nice neighborhoods. When everyone you know lives
this way, it's hard to believe anything else is possible.
Expectations have definitely changed since my grandparents'
time, when owning your own home without a mortgage was actually
the norm. In fact, there was a time not long ago when it was
expected that a family would build their own modest house
with their own hands, paying for it as the go.
Now, however, most of the city dwellers I know are willing
to take out the largest mortgage the bank will give them so
they can live in the biggest, nicest house they can currently
afford, even when they're old enough to know better. I know
of one man nearing retirement age who just bought a house
that carries a $1,200.00 a month mortgage.
By the time he retires, in ten years or less, he will have
made only a small dent in the principal of that loan, but
will have paid out thousands of dollars in interest that he
will never get back. If he can't continue to make the payments
with his retirement income, or if he has any financial emergency
such as an illness or accident, he will be forced to sell
his home whether the market is right or not. If he can't sell
fast enough, he may have a foreclosure on his credit report.
It's also now common for home owners to take out equity loans
to finance their kids' college education or a new car, or
even a vacation. Their monthly housing bill goes up and their
equity disappears. They don't intend to owe their soul to
the bank, but somehow it just happens. These home owners will
also need to sell when they reach retirement age, because
their retirement income can't cover the first, second and
third mortgages on the house. If the debt is high enough,
the price they receive for the house will barely pay the real
estate agent's commission, leaving nothing to show for years
of payments to the bank.
If you agree that this is not a sane way to live, this report
will show you how I got out of this rat race and liberated
myself from the monthly rent or mortgage payment.
Is it "easy" to buy a home of your own, mortgage
free? For some people, who have the right attitude, it is
both easy and fun. It certainly was for me. But in order to
work the plan and become mortgage-free, you do need to make
a few lifestyle changes – and I admit that this plan
won't appeal to a lot of people. Anyone should carefully consider
all the options and pitfalls before making any drastic moves.
But if getting out from under a mortgage looks like a reasonable
thing to do, this is one very feasible way to get it done.
During this process you won't need to give up anything you
need, but you may have to give up a few luxuries. If you feel
you have to mortgage your life so you can park your SUV in
front of a McMansion, this plan probably won't work for you.
If you must stay in an area where all the homes are fast becoming
unaffordable, you may need to come up with a different strategy,
or you may need to work the plan for a longer period of time.
The national economy and your local real estate market can
also change at a moment's notice, so you should create a contingency
plan, just in case.
If you do follow the plan but get stopped part way through
because of unavoidable circumstances, such as a nationwide
recession causing a drop in real estate values, you will still
be in a better financial situation than most of your friends.
You will need to be more frugal than they are to get where
you're going, so at any time in the process you will have
a larger safety net than most of the people in your same income
bracket:
- In the first phase of the plan you'll have lower housing
costs and a bigger bank account.
- In the second phase you'll have a lower mortgage payment
and a house that's less expensive to heat and maintain.
- And in the final stages, when you own your own house free-and-clear,
you'll have only your property taxes, utilities and maintenance
costs to pay, without that huge mortgage payment to the
bank.
I fully expect that very few of my readers will ever take
these steps. Living without a mortgage may sound like a "good
idea" to most people - but on the other hand, most people
aren't really willing to make the changes to their overextended
lifestyle that would allow them to actually accomplish a mortgage-free
life.
But there are other people, like me, who long for more free
time and an earlier retirement. If you're willing to give
up a few things now in order to have a quality life in just
a few years, a mortgage-free home will help you achieve that
goal.
I'm going to tell you how I achieved my goal of buying a
house for cash 5 years after a divorce left me flat broke.
I'll also tell you how my friend Candace did it, on a slower
timetable. You can then look at your own situation and goals
and create a plan that will work for you.
I'm convinced that just about anyone can own their own home.
It could be possible for you, as well.
Next: Step
One: Start Saving for a Down Payment
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