Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 5 months ago

Best way to buy a house?

Hi I’m 25 and Me and my boyfriend have been saving up for a house to buy . People tell us we Have to get a mortgage in order to be able to afford a nice home. However me and him really don’t want to get a mortgage because we don’t want to pay the interest on it. So far we have 50,000 saved up and want to use 40,000 for the down payment and 5,000 for closing cost and save the rest. We are looking at homes around 350,000. Is it possible to purchase a home like this without a mortgage or what are my options also how much are we likely to pay monthly? I heard the more down you put the lower amount you pay monthly is this true? Also I live in tx

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  • Anonymous
    5 months ago

    Only and I do mean ONLY a FOOL would do what you two are thinking of doing and that is buy a home with someone you have no legal relationship with. Do not throw that luuuuuuuuuuuuuuuuuuuuuuuuuuv crap back at me because it happens all the time around here where we see idiots who do what you two are contemplating and want to know what to do now and the options available to married people are not available as quickly to shack ups.

    You would need a combined income of 100K or more or 1/3rd the price of what you get the mortgage for. You can inflate that but you are also asking for loss of the home.

  • 5 months ago

    If you don't have the cash to purchase the property...you will need a loan. A loan on a residential property is called a mortgage...is there something you are missing here?

    Even if the seller offered owner financing....that's still a mortgage. Where do you think the rest of the money would come from in this instance?

  • Amy
    Lv 7
    5 months ago

    Do you not understand what a mortgage is?

    You want a house that costs $350,000. You are only willing to spend $40,000 right now.

    Do you live in a fantasy world where someone will sell you a house for only 1/10 of its value?

    Or do you live in a fantasy world where someone will loan you $310,000 at no interest?

    A mortgage is a LOW INTEREST loan.

    Your credit card charges something like 25% interest per year, and that's how the credit card companies avoid losing money even though some people fail to pay their credit card bill.

    A mortgage charges 4 to 5% interest. The bank can charge a low rate because the value of the house itself ensures that you will always be able to pay back the loan, even if you have to sell the house to do so.

    Your monthly payment will depend on how much money you borrow, the interest rate, and how many months the payments are spread out over. You should google "mortgage calculator" and play with the numbers, see what's within your budget.

    Paying $310,000 over 30 years at 4% interest puts the monthly payment at $1,480.

  • Judy
    Lv 7
    5 months ago

    If you don't want to get a mortgage you'e have to save the whole 350K plus closing costs. The money has tot come from SOMEwhere

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  • 5 months ago

    OK, you put down $40,000 on a house that costs more. How does the seller get the rest of their money? You make payments to them? THAT is a mortgage. It's a private mortgage, not a mortgage through a bank, but it's still a mortgage.

    The only way to buy a house without borrowing the money from someone is to pay 100% cash. Are you going to save until you get $350,000? And save that money while paying rent? It can be done, but by the time you have saved that much, the same house will cost far, far more than what it does today.

    Mortgages are smart. Yes, you have to pay interest, but what you are doing is leveraging your investment. You are getting to control a large asset for a small investment. If your credit and income are good enough, you might be able to buy a house for $350k by putting down 10%, $35,000.

    You own it for ten years, make the payments on it that, if your income and credit were good enough for the lender to give you the loan, you will have no trouble paying for. Now, let's say values keep going up and in ten years, the house is worth half a million. You made $150k in ten years on an investment of $35,000. To turn that same $35k into double in ten years, or $70k, in the stock market, you would need a consistent rate of return of 7.2%. To turn $35k into $150k in ten years in the stock market, you would need a consistent rate of return of about 15%. And we all know that the stock market has ups and downs.

    So now, subtract the 4% interest you're paying on the mortgage over those ten years from the 15% you got, and you have owned an investment that gave you 11% a year. That covers the interest. The principal you paid is still yours, it's the equity in the home after paying down the loan. And you owned it, you didn't have a pile of receipts from renting.

    If you have managed to save that much money, you are WAY ahead of most first time buyers. Go sit down with someone at your bank and discuss what is involved in getting a mortgage. They can tell you the income you need to buy a house at any price, approximately how much the payments will be. There's no obligation. Once you have the roadmap and are ready, then you can start shopping, for a house and for the best mortgage rates out there.

    • SumDude
      Lv 7
      5 months agoReport

      Very true, but someone who cannot plug and chug to get the payment is unable to follow your analysis.

  • 5 months ago

    You are very confused. If you don't want a mortgage, then you have to pay the full cost upfront when you buy. There is no down payment--you pay the whole amount.

    A mortgage means that you put some money down and then borrow the rest and pay it back over time (15 or 30 years, usually).

    So, if you don't want a mortgage, you have to save up the whole $350,000. If you want to make a down payment of $40,000, then you'll get a mortgage for $310,000. Your monthly payments will depend on the interest rate you get and how long you have to pay the mortgage back (15 or 30 years). There a hundreds of on-line calculators that will tell you what the monthly payback is. Don't forget to add in your property taxes and homeowner's insurance premium.

    • erika5 months agoReport

      Thanks for the info. I’m a first time buyer so I’m clueless and apparently the person I spoke to was just as clueless 🤷🏽‍♀️

  • Anonymous
    5 months ago

    Yes you can buy a $350,000 house without a mortgage when you have about $360,000 in cash.

    Down payments are only relevant if you are borrowing money to buy the house. Let me explain how a mortgage works.

    You find a house for $350k. You make a $50k down payment. You still owe the seller another $300k. You apply for a mortgage and the bank then pays the seller the other $300k. You then make payments on the $300k to the bank.

    When you buy a house, the seller needs to be paid in full. So you either pay in full with your own money or you borrow money. You are not making payments to the seller. You are making payments to the mortgage lender.

    And since you asked what the BEST way to buy a house is...do it ON YOUR OWN or with someone you are MARRIED TO. Never, ever buy real estate with someone you are not married to. Your bf could decide he likes his next door neighbor better than you. She could move in, you move back to your mummy's basement and then what happens if bf refuses to pay the mortgage? You're now stuck in mummy's basement paying the mortgage on a house that your ex lives in with his new gf and you can't even rent an apartment because you don't qualify due to the mortgage debt.

    You've heard of divorce, right? That's when a couple goes before a judge to dissolve their relationship and the judge sorts out who does what and who gets what. You don't get that if you aren't married. You're freaking STUCK. It's WAY easier to get out of a marriage than to get out of a house with a bf/gf. Odd but true. Hang out on this board long enough and you'll hear the horror stories.

    ETA: Sounds good! Congrats! Just make sure you go to court and get hitched before you buy the house. I'm seriously not kidding.

  • 5 months ago

    You have little choice but a mortgage unless you have about $400,000 in savings

    To afford a house that costs $350,000 with a down payment of $70,000, you'd need to earn $60,802 per year before tax. Yes, you would need at least 20% down. 30% which is $105,000 would be better.

    A good rule of thumb is to spend no more than 28% of your pre-tax income on your mortgage payment.

  • Anonymous
    5 months ago

    Don't buy a house with someone you aren't married to.

    You can pay cash if you don't want a mortgage.

    • erika5 months agoReport

      We have 2 children together and been together for 8 yrs we decided to save the wedding money for a home . Sorry I didn’t put much info on my relationship lol

  • Mog
    Lv 7
    5 months ago

    Look for foreclosures

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