Can you live without a mortgage?

September 10, 2013 — 15 Comments
Can you live without a mortgage?

This is how we paid off our first mortgage… sold the house!

One of the biggest purchases most of us will ever make is a house. It’s become pretty common to take out a 30 year mortgage and to have it our entire life – but did you know almost 1/3rd of Americans live without a mortgage?!

As I’ve discussed before, I think amortized mortgages suck because the majority of payments the first seven years are only applied to interest – meaning we aren’t gaining much traction in home equity which is one of the true values of home ownership.

If your goal is to do something crazy like pay off all of your debt and do what you want with your life, the mortgage is one of the major things you need to battle.

The way I see it, you have a few options if you want to live without a mortgage:

1. Pay off your mortgage

2. Rent – but you still have a monthly payment so that doesn’t really work

3. Live with your parents (We’ll probably do this for a while when we get back from our trip!)

4. Live in a camper van (we did this for almost two months, not the worst thing in the world, but we wouldn’t be able to do it long term!)

So I’ll go with option one because that’s what we’re striving for (no offense parents). So how can we quickly accomplish option one?

1a. Buy a house way cheaper than you can afford – even the 2x income rule is too high if you want to pay it off quickly

1b. Put at least 20% down – or pay for the whole thing with cash!!

1c. Get a 15 year mortgage max (this means you’ll pay way less interest up front than with a 30 year mortgage)

1d. Pay off all of your other debt, then go for the mortgage with every bonus, pay raise, extra income earned through lemonade stands and car washes (may have to put the kids to work for the last two; not sure how well an adult lemonade stand would work – John Daly’s anyone??)

Easy as that, right??? Of course it’s not, but if you do the things in the beginning right, it’ll make your chances of quickly owning your home outright more possible.

The other problem is our constant need to upgrade our houses. Yes, most people will probably have to buy a new house as their family gets bigger, but buying and selling houses costs a whole lot of money and the more you do it, the more money you’re wasting that could go straight to the mortgage.

Let’s take it to the polls to see how we’re all doing with our mortgages – so where do you stand?

By the way, did you know almost 1/3rd of American households have their mortgages paid off? According to Zillow, this is who:

“the nation’s most elderly were the most likely to own their homes, with 77.6% of those 85 and older owning their homes outright, followed by those ages 74 to 84, at about 62.7%. One outlier was those homeowners ages 20 to 24. Out of that relatively young demographic, about 34.5% owned their homes outright.”

Do you think it’s possible to live without a mortgage?  If you do live without a mortgage, let the rest of us know how!

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15 responses to Can you live without a mortgage?

  1. Now the plan is 15+years, but that is not my desire. I know this is crazy but the writing I do is my vehicle to getting free of the yoke of the mortgage. My first milestone (still a bit away) is to make our monthly payments solely from my work. The next step after that is to double up on payments.

    Now basing your life on the future is a crapshoot. There is always a chance of failure. But this is what I know, even if I don’t make anymore money than I have I will be no worse off than I am now. But if I make it the rewards will be more than enough.

    If I don’t even try then there is no chance it will ever happen.

  2. We work our mortgage like our investments. We are at a point that we could pay it off but oddly we need the tax write off. Oncs that’s not the case it is pay it off time. 🙂

  3. I rent. This makes saving very difficult.

    • Lorraine – this can be true, but renting is generally cheaper than owning a home because all of the add on costs (maintenance, property taxes, etc). I’m sure your turnaround story will continue and good things are to come…

  4. I currently rent. Its actually saving me money. I’m also not sure where I want to live for good yet so renting is just fine.

    • Jason – definitely agree that there are a lot of advantages to renting. I rented my first five years out of college and didn’t regret a bit of it… and I moved cities during the recession so my house would’ve been underwater if I did buy

  5. My husband and I had a small mortgage (because we paid so little) on our first apartment, which we didn’t fully pay off until we sold the apartment. We should have and would have had a nice chunk of money. Then we rented for a few years and then bought again in cash. Word of advice: buy and sell in the same market! We were undecided where we wanted to live, so rented and then decided we wanted to stay in NYC. By then the prices had risen considerably so we had to buy in at a higher price. You cannot time the real estate market just like you can’t time the stock market.

    • Oh yes, timing the market is so tempting but as you mention, playing that game usually doesn’t turn out well. “and then we bought again in cash” – not a phrase much sweeter than that!

  6. Our goal is pay off early. Right now it’s still just a plan since I am no longer working at my day job.

  7. Housing prices in Idaho are hard to beat, so I panic a bit when I think about moving to Seattle in a couple of years. We just refinanced and will save a good deal every month. I only wish I would have known sooner you can refinance two months before you move back into a house you’ve been renting. Live and learn, but rates went up more 1.5 points while we got ready to move back home. I have one friend who bought a home as a tax write off (she and her husband live on his employer’s ranch rent free). Then her daughter bought a house at age 20 for about 50K. It’s a cute, little house that only needed a bit of elbow grease, but she was able to buy it when so many houses were being abandoned by their owners.

    • It’s funny how a little “elbow grease” can scare off so many potential buyers… but when someone like your friend’s daughter goes for it and cleans it up, it can be a nice return!

  8. I do live without a mortgage for two years now.

    This changed my life dramatically as I rented for 21 years.

    I can compare the situation.

    I am 42 by the way.

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