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.
< Step One: Start
Saving for a Down Payment * Step
Two: Buy a Cheaper House than You Can Afford >
Learn About Your Local Real Estate Market
During the time that you're saving for your first house,
you should also be doing some research.
- Do as much reading as you can to learn about the different
types of mortgage loans available in your area, so you'll
know what the loan officer is talking about when you finally
sit in front of her desk.
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- Read the local paper and keep an eye out for the neighborhoods
that appear to be improving.
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- Find out where special loan programs are being offered
in order to improve specific areas of the city. And pay
attention if the newspaper reports a proposed commuter line
or other public improvement – houses in these areas
almost always increase in value.
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- Find a website that allows you to search the local Multiple
Listing Service (MLS) listings, so you can watch the house
prices in these improving areas, and see how quickly they
sell. In Portland, Oregon, you can find these listing at
www.RMLS.com.
Individual real estate companies usually have a link to
the local MLS listings – you want to look at all available
houses, not just the listing from one real estate company.
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- If you qualify for a state-sponsored loan program that
requires you to attend a class, sign up for the class as
soon as you can.
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- If you need help in improving your credit score, find
a non-profit agency that will work with you to become eligible
for a home loan.
To become an "expert" in mortgages, you might want
to read Jim Edward's ebook The
TEN Dirty Little Secrets of Mortgage Financing.
In two or three years, starting from flat broke and with
even a low-paying job, you should have saved enough for a
down payment on a small house - and you should also know exactly
where to focus your house-buying search so that you'll be
able to find a solid home that can be easily improved and
sold for a profit just a few years later. You'll use this
profit to make your final move towards owning a house without
a mortgage.
If local home prices in your area are insanely high, you
might want to check the markets in other cities. When you've
saved up a bit of money, go to the National
Association of Realtors® website and see if any of
the cities listed on their report would appeal to you.
For instance, the median price of a single-family home in
the Seattle area in the first quarter of 2007 was over $380,000,
but the median price at the same time period in Spokane, Washington
was only $181,000 – a $200,000 difference! Home prices
in the Spokane area are still going up, although the rate
of increase is not as high as it is on the Western side of
the state.
Spokane still has truly affordable homes available for sale,
at the time of this writing. I just did a quick search on
a Spokane Real Estate
website that shows all available listings in the area,
and found several small homes for under $70,000. The homes
may need to be held longer before enough equity builds up
to buy a house for cash, because the housing market is not
as hot – but the affordability of homes in the area
could make it possible to buy your first home with a low monthly
mortgage rate.
Houses in small towns near Spokane are now selling for considerably
less than that, but are probably too far away for a daily
commute, and may be more difficult to sell when you're ready
to take out your equity.
If moving to a new area seems like a possibility for your
family, you'll probably want to check the local job listings
and send out your resumes so you can find employment before
making any drastic moves. And check with local mortgage lenders
to see how long they want you to be employed in your new job
before they lend to you.
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Important Links:
FSBO
Selling Tips
Planet Money Podcasts
Robert Reich’s
Blog
Talking Points
Memo |
