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Common Misconception – Can’t Buy a Home Without a Mortgage

This is quite a difficult question to answer believe it or not because in reality everyone’s financial situation is different and what works best for one may not work best for others. You see my Grandfather who I spoke about in the introduction taught his family members that debt was okay and that mortgages were a necessary part of living. What I have learned through the education he demanded I get is that this wasn’t exactly true.

You can buy a house without a mortgage and most financial professionals that have your best interests in mind would recommend you do. I personally lean towards no mortgage as well because the benefits significantly outweigh the negatives. Paying cash for a house has many benefits:

  1. Significantly less monthly debt.
  2. Pay “Zero” Interest
  3. Lower your monthly expenses greatly
  4. No Closing Costs
  5. No Loan Origination Fees
  6. Increased Financial Security
  7. Less of a Financial Burden
  8. No Appraisal Fees
  9. Cash is King – Beat the Bidding War Game

Paying cash also has some negatives that you should be aware of and you have to really measure the trade off’s and the opportunity costs of this decision.

  1. Loss of Liquid Assets
  2. Less Money to Invest Initially
  3. Loss of Tax Write-Off for House since it is based on Interest Paid.

Some would argue that #3 is the best reason to get a mortgage but let’s look at it just a little closer.

If you take a $250,000 Mortgage over 30 Years at 3.75% you will pay a total of $416,804 for the house that is just worth $250,000. You will pay more than $166,000 in interest, $166,000 more than what the house is worth for a tax write off? Let’s look at this ONE MORE WAY.
If you took that $166,000 and invested it and also invested that Mortgage payment that you would have had of $1158.00 per month for the next 30 years at a simple 5% interest which is REALLY LOW! In 30 years you would have earned over 1 Million Dollars in Interest. Matter of fact at this exact rate you would be a millionaire in the year 2038.
Morale of the Story! STOP PAYING EVERYONE ELSE INTEREST! START PAYING YOURSELF IT.

 

Thank you for visiting the financial literacy section of my page.
If you would like more information or are interested in having me come speak e-mail me at Joseph.Serviss@gmail.com or call me at 704-794-2434

About Joseph Serviss

Joseph Serviss
My name is Joe Serviss. I am a Northerner who fell in love with the South. A resident of North Carolina for 3 years and serving the community as a Business & Finance teacher at Jay M. Robinson High School... READ MOREl

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