How to buy a house debt free

How to buy a house debt free – Really want to own a home of your own, or take advantage of the many great real estate investment opportunities available right now, but don’t want to join the ranks of the millions of underwater homeowners out there or have the stress of meeting a mortgage payment every month?

If you already own a home and have equity in it you could decide to sell, downsize and purchase a new home for cash. If this isn’t an option, and you are tired of making your landlord rich, there are a number of ways to buy a home now and pay off a mortgage faster.

Leveraging your home purchase with a mortgage isn’t always a bad thing. With interest rates and home prices so low this is the optimal time to buy, and locking into a great deal now can help you accumulate a lot of equity through appreciation. In fact, some homeowners who could afford to be debt free choose to maintain a mortgage for the tax benefits and deductions. Just recognize the difference between good debt and bad debt, and don’t sink yourself with too much of it.

There are a number of ways to pay down your loan faster to become debt free far sooner than 30 years from now. Maybe one of these ideas is right for you.

1. Make bi-weekly mortgage payments.
2. Take a shorter loan term with a lower rate. Ask about 20- or 15-year fixed loans.
3. Take out an interest-only loan and do one of the following:
a. Pay down principal with commissions or bonuses.
b. Put the difference in a higher yielding investment, and use the proceeds to offset the interest.
c. Purchase a multifamily property and apply the rents directly toward principal each month.

Lorraine Santirosa is a San Diego Real Estate agent.

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