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So your top goal for 2014 is to buy a home! Congratulations! We’re behind you 100%—as long as you’re already out of debt and have your emergency fund saved, that is.
While we’re giving out free home-buying advice, here’s another tidbit to consider: Don’t stop saving once you’ve built up your down payment. Go all out and continue saving until you can pay cash for your home! Dave calls that the 100% down plan, and it’s his favorite way to buy a home.
100% Down on a Home? People Do it All the Time!
Think it’s impossible? The Wall Street Journal reported that nearly half of all the homes sold in 2012 and 2013 were bought with cash. Investors likely made up a significant portion of those transactions, but comments following the article reveal real people paid cash for their homes too.
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“I just purchased my home with cash, and I’m not independently wealthy,” one commenter said. “The people buying these houses are just as average as you.”
By paying cash and skipping a mortgage, these folks are setting themselves up for anything but an average life. Imagine what you could do for your future, for your family and for others if you were debt-free and had no mortgage!
The average house payment is nearly $1,100 on a 30-year term. If you pay cash for your home, you can invest that money instead and end up with $2,300,000-3,500,000 at the end of that 30 years. That’s how you live like no one else!
Can’t Wait? Here’s the Next-Best Option
While paying cash is the best way to buy a home, we also understand your desire to get in a home sooner. In fact, a 15-year, fixed-rate mortgage is the one type of debt Dave won’t get mad at you about.
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But never sign up for a term longer than 15 years. You’ll end up paying thousands more in interest on a 30-year mortgage versus at 15-year mortgage. For example, on a $225,000 mortgage with a 6% interest rate, you’ll pay $144,000 more in interest over 30 years. Use our free mortgage calculator now.
Just like buying a home with cash, that kind of savings can have a multi-million-dollar impact on your future. So while you’re shopping for your new home, be smart. Don’t fall for a home you simply must have no matter the cost. Stick to a price range that will keep your payment at 25% or less of your take-home pay.
Work With an Expert to Find a Deal
Whether you’re buying with cash or you plan to borrow, you’ll want to get a deal on your new home. A real estate agent who’s an expert in your local market will be able to spot homes that fit your budget, and they’ll have the know-how to negotiate a great price too.
If you’re looking for an agent with experience and in-depth knowledge of your market, talk with one of Dave’s real estate Endorsed Local Providers (ELPs). Your ELP will help you get started on your home search right away!