Money Matters – Buying the American Dream

Everyone needs shelter and owning a home is the first step in achieving the American Dream. With the current volatility in the housing market, compounded by the ever-widening wage gap and exacerbated by an increasing inflation rate, purchasing a home seems like only a pipe dream to so many young people.

Most people think that buying a ready-made house and getting a mortgage is the only way to buy a house. This is, in fact, the most expensive way of buying a house. I know this because I, like so many others, have a typical mortgage on a typical house.

Here’s some stats regarding my mortgage:

Yes, you read that correctly. I’ve paid just over $300K and only $54K of that went to paying down the principle. This is very typical for an amortized loan that’s decades long. Discussing financing, compound interest, and home loans is a huge discussion within itself. And that’s another discussion than the one we are having here. Today we are going to discuss ways to save money on the house itself.

So, what are some ways to buy a house that don’t cost an arm & a leg?

  • Pay cash, so you don’t get killed on financing charges. (Easier said than done, right?)
  • Inherit some property (We should all be so lucky)
  • Purchase some land and build a house. Other people do this, so why not you? It’s a great way to get exactly what you want at an affordable price.
  • Location, location, location. There’s an old saying in the real estate business that says: “Buy the worst house in the best neighborhood“. Your improvements can only help bring up your home’s value.
  • Buy a house that needs some renovations and do as much of the work as possible yourself. It’s called “Sweat equity” for a reason.
  • Speaking of “sweat equity”, do you have any friends that owe you a favor? Time to call all of them up and enlist their help.
  • If you do buy a fixer-upper, use the estimated retail cost of repairs to negotiate a lower purchase price. The seller doesn’t need to know that you won’t be paying retail for those repairs.
  • Make your purchases during the winter (off season) to negotiate a better price.
  • Buy a smaller house. Sure, we’d all like to have that big house with the white picket fence set back on a huge, treed lot; but buying a house that suits your practical needs is more cost effective than buying something big & flashy.
  • Buy someplace more affordable, even if that means your commute to work is a little longer. If you have a job that allows you to tele-commute, your possibilities of WHERE to buy just became huge.

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