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How to buy a house without a bank loan

There is an unspoken rule in the real estate market. You must have a bank mortgage to buy a house. But did you know that there is a secret way to buy a house without a mortgage?

There is a secret financial trick you can use to buy your dream home in about 8 years and have NO mortgage payment. I know this sounds ridiculous but it’s true. When I write this article, most of the time, I focus on the negatives of homeownership and what to avoid when buying a home. This week I thought I would focus on the other side of the table. What to do if you are NOT in financial trouble or at risk of losing your home.

In the last couple of weeks I have received emails from people who are trying to move into their first home or improve their current home. I rarely get questions about what to do to save a house. So I’ll try to pay more attention to improving your current home. Now back to what you really want to know. How do I get a house without a mortgage? Before I tell you how to do this, remember that not having a mortgage on a home, while helpful, is not the answer to all your financial worries.

You will still have to pay property taxes and electricity, gas, etc. And remember I said the house of your dreams. It’s not your current home, so you’ll likely face higher gas, electric, and utility bills. Your taxes could also be substantially higher. So if you’re okay with these issues, I’ll share my secret with you. Have you ever heard of compounding or compound interest? Compounding is basically when you start with a small amount of money and allow it to accumulate over time, then take the money that has accumulated and reinvest it with the original money for an even higher return.

Over time, you can achieve huge profits simply by reinvesting your earnings. Well, if I haven’t gotten too technical, this composition technique can also be used for a house. You can buy a house for less than the market price, stay in the house for about two years, make a few minor improvements, and sell the house for a profit. This is because home values ​​always increase over time, and by buying a house below market value, the value increases even faster.

Take all the profits from that house and put it into your next house that you also buy below market value. Do the exact same technique, by the fourth or fifth home you will have a larger home, very little or no debt, and will have paid no taxes on any of the proceeds from the sale of your other homes. The reason you won’t pay any taxes is because the government allows you to not pay taxes on the sale of your home if it’s your primary residence for two years and you take the proceeds from the sale and put it towards the purchase of your new home. . It’s the government’s way of saying thanks for stimulating the economy (selling your house and buying another).

Now I know you’re probably thinking you don’t want to move every 2 years. You don’t HAVE to move every two years, two years is the minimum you must be in the house to qualify for tax exemption. This is a great technique for young couples who don’t mind moving (especially to a bigger house) every couple of years. Now for the disclaimer. Before you start selling your home, check with your accountant to make sure you can qualify for this exemption. Also, this technique may seem a bit complicated. If you have questions about how to do this, email me and I can explain a bit more.

Until next time, good luck and God bless and remember… If you have any questions about saving or selling your home or any real estate topic you’d like to know more about, send me an email and I’ll answer your questions at this column.

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