Declare Mortgage Independence

As a Realtor, I consider it one my jobs to make sure that my buyers know what they are getting into. When looking at homes, it is easy to get dazzled, and buyers can start talking themselves into things that make me cringe.

So, in the spirit of Independence Day, I present How to Declare Mortgage Independence.

No, I'm not suggesting anything shady here. This isn't like how to stop paying taxes. This is how to plan ahead so that down the road you can be one of the people who own their American Dream outright, no mortgage, nothing owed to the bank.

The key here is planning ahead. This is a crucial thing to do when buying any home.

Don't let yourself get house poor. Talk with the bank first and know your buying power. Then, decide if you want your house payment to be the maximum that it can be or if you want something lower. If you buy a house at a price that is under your maximum, you will be more able to cope with emergencies, save for luxuries or pay extra on your mortgage.

Go for the shortest term mortgage you can afford. A 30 year mortgage is pretty standard, but in the long term, it costs you thousands upon thousands more in interest than a 15 year mortgage. With a 30 year mortgage, many also feel like paying it off will be impossible. I mean really, 30 years to own my house? Most of us scoff and feel like that will never happen. However, a 15 year mortgage, now that is something different. Hey, just 15 years ago, I was graduating college. That is a time period that feels more doable to many people.

Pay extra on that mortgage when you are able. If you already have an adequate savings, direct a little extra towards your mortgage. If you paid attention to buying under your ability, you are more likely to be in this position as the years go by. Surprise money? Instead of spending all of it on a vacation or treating yourself, take at least a portion and put it towards your mortgage.

Plan to stay put. Houses are not like cars. You cannot trade them in every 3-5 years for something newer. Well, you can, but you'll end up losing money in most markets. The early part of this decade, when people were selling after 3-5 years and making large amounts of money on their homes, was an anomaly when you look at history. When you look at homes, plan for your long term needs. How many kids do you think you'll have in 5-7 years? Plan for enough bedrooms. Are you getting older with retirement on the horizon? Look for things than can accommodate reduce mobility just in case. Think long term, not just "Oh, we'll sell in a couple of years and get what we need then." If you can stay in a home for the better part of a decade or more, you will reap bigger benefits when you do sell.

If you waiting for enough years in order to have your home appreciate significantly and have a significant chunk of your mortgage paid off when you do sell, you can buy a more expensive home without having to increase your mortgage expenses.

You can declare mortgage independence, but only by planning ahead.

Have a safe and happy Independence Day Weekend!