How to buy “a” house without using credit. Specifically.


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The key in purchasing “a” house without credit is understanding what “a” house actually is. Many people will say they can’t afford a house in cash and they’ll use that statement to mask the fact that they’ve never even sat down and tried to figure it out.

“A” house can mean anything. Its self – defeating. It subtly regurgitates the broke frame of mind regarding staying in debt that so many people around us fall victim to. It also lets the person you’re asking the question to (How will I ever buy a house without debt?) know that any answer you give them will never get past their wall of complacency and state of constantly wishing for something easy. Those that truly want to be different from those around them, no longer tied to their jobs and no longer stressed about money will ask about specific houses. These people search for answers they don’t know and not answers they do know. Think about it.

So lets talk about specific houses for a second.

1. How to buy a $64k house in Ohio:

  • Annual household income (combined): $21,333
  • Take home monthly income after taxes: $1450
  • Amount saved and invested per month to purchase property: $500
  • Duration: 7.2 years
  • Amount saved from not paying a mortgage: $62,893

2. How to buy a $135k house in Atlanta:

  • Annual household income (combined): $45,000
  • Take home monthly income after taxes: $2,812
  • Amount saved and invested per month to purchase property: $1,000
  • Duration: 7.5 years
  • Amount saved from not paying a mortgage: $178,967.50

3. How to buy a $229k house in Long Beach:

  • Annual household income (combined): $76,333
  • Take home monthly income after taxes: $4,770
  • Amount saved and invested per month to purchase property: $1,700
  • Duration: 7.5 years
  • Amount saved from not paying a mortgage: $271,532.50

4. How to buy a $285k house in Carson:

  • Annual household income (combined): $95,000
  • Take home monthly income after taxes: $5,937.50
  • Amount saved and invested per month to purchase property: $2,100
  • Duration: 7.5 years
  • Amount saved from not paying a mortgage: $327,275

5. How to buy a $310k house in LA:

  • Annual household income (combined): $103,333
  • Take home monthly income after taxes: $6,458.33
  • Amount saved and invested per month to purchase property: $2,300
  • Duration: 7.5 years
  • Amount saved from not paying a mortgage: $352,695

6. How to buy a $500k house in LA:

  • Annual household income (combined): $167k
  • Take home monthly income after taxes: $10,417
  • Amount saved and invested per month to purchase property: $4,000
  • Duration: 7 years
  • Amount saved from not paying a mortgage: $524, 465.10

7. How to buy a $500k duplex in L.A.

  • Annual household income (combined): $167k
  • Take home monthly income after taxes: $10,417
  • Amount saved and invested per month to purchase property: $4,000
  • Duration: 7 years
  • Amount saved from not paying a mortgage: $524, 465.10

So as you can see, there are a variety of housing/budgeting situations you can find yourself in depending on WHAT house you’re looking at. And the key to making them work is to have the appropriate income needed to take out a mortgage for that type of house in the first place. The general rule for being able to comfortably take out a mortgage is to have no consumer debt and have an income of 1/3rd the overall price of the house/amount of the mortgage.

But back to staying debt free.

It takes 7-8years max to buy a $310k house in cash folks and we’ve been telling you this since 2009. Noone hoping to build wealth needs to throw away 22 years of compound interest you could invest allowing you to never have to work again simply because you had to rush into a 30 year mortgage payment.

And this is even more likely to happen if you’re following our plan with your significant other and can maximize that very powerful “dual income” you both have on a foreclosure or distressed sale.

For anyone swearing that what I’m instructing you to do is impossible, you need to know that if you make the income it takes to qualify for a $310k mortgage then you and your spouse can save and invest the $2300/month necessary to do this. But if you don’t make the amount to qualify for that mortgage

why are you in my face about this again?

Shout out to single moms making $35k trying to buy houses in Ladera. You are a rockstar.

This is not the housing bubble years folks, that was a one time event that blew the entire country up due to unrestricted borrowing. Stop chasing after one off events that banks wont even have the capacity to allow to happen again – LEGALLY.

Property values have doubled since 1998 (15 years ago). The typical timeframe for a house to double in value is 30 years.

Now ask yourself, have average incomes doubled since 1998? Where is the demand going to come from?

A little econ never hurt anyone trying to grasp the bigger picture.  I highly recommend opening a book.

You.Have.Time.

Don’t rush into anything you don’t need to and don’t do anything stupid.

(to learn about what you should consider if you feel you must take out a mortgage, click here.)

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One thought on “How to buy “a” house without using credit. Specifically.

  1. pat

    I ran across this article by accident but know what you are sharing to be true. My personal and current situation is that my husband and I are building our dream home. It started out as 3000 sq. ft. and ended with 4500 sq. ft. We had saved $50,000 originally to purchase a simple home several years ago when the market was much more buyer friendly. After not finding that perfect feeling home, my husband came up with the bright idea to build. Great! But who was going to do it? Well, it was dropped in my lap to take it from start to finish. I found a previously foreclosed piece of waterfront land, 2.17 acres, in a gated community for $15,000. YES. We saved a tremendous amount by doing most of the work ourselves with the exception of electrical, mechanical, stucco and plumbing. Our estimated final cost will be $180,000 because of the upgrades we decided were a must. Five homes have been built in the community since we started, selling for $350,000, $365,000 $380,000 $419,000 and $450,000. Two years later we are almost finished with no one to owe but the taxman.

    Here’s the MUST to getting to that point. We paid off all our bills, current home and car included. Which took us a year and 1/2 to accomplish. Believe me it was a long year. Not to mislead, our monthly bills added up to a little over $1,500.

    By the way — Loved the article!

    Like

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