20+ Housing Options, Mortgage Evaded.

Photo from here.

We now come to the last post in the series of on living free of debt, and it will challenge the assumption that debt is necessary to acquire housing.

Before beginning, here is one remark: If you must seek a loan, seek a private one (perhaps owner financing or one from a Christian), not one from a bank. See why here. But please, seek to avoid a loan. For many people, it's easy to get one and they don't even think twice about it, but it's not good.

Another reason to avoid mortgages: Over the course of a 30-year mortgage, a LOT of interest is paid. A 150K loan with 4% interest, for example, has $107,804.26 just going to interest. What's worse is that banks apply most of the early payments to interest, so equity is built very slowly. 30 years of payments/servanthood. $257.8K for a 150K house. A few missed payments and all you've spent is lost. Ouch. Alternatives, please?

Edit: When one realizes how much this adds up to when so many Christians do it over multiple generations, it becomes clear how much incentive there is to avoid this and seek other options--options that will allow for magnificent generational blessings. (See the edit near the bottom of this post.)

HOME: Housing Options, Mortgage Evaded:

Be of good cheer! There are many alternative housing strategies. Some of the following ideas will be relevant to many people; some to only a few people. Some will be temporary housing options while some are permanent. Many strategies will be most effective when combined with others. It's not an extremely well-organized list. It does, however, present many strategies to have housing without a mortgage.

1. Pray.

Don't neglect this. Trust God. He is the one who provides. Matthew 6 is very encouraging to believers.

2. Live with family/friends.

This is possible for families temporarily, but it's especially applicable to young people, singles, and the elderly. "God sets the solitary in families." (Psalm 68:6) Genesis speaks of a man "leaving his father and mother" when he marries. There may be exceptions, but certainly, the modern American idea of everyone living in their own apartment must be challenged.

Instead of renting an apartment for $500 per month, if a young person lives at home for a few years before they marry, each year they'll have saved $6,000 in rent alone (when including utilities, food, etc, this will be higher). After a few years, this would add up to be enough to buy a house if combined with the strategies below. Similar can be said about having parents in retirement homes.

3. Extreme generosity.

As an example of this option, a generous Christian allowed my family -- who had gone through a hard time due to oppression -- to stay in his second home for a number of years until, by God's grace, we were able to get on our feet. What an absolute blessing and a wonderful example of Christ. I've not seen many people who are willing to really give of themselves for others, but this was an amazing example. I want to be like this to others.

4. Rent to buy time, rent to save up, and/or rent-to-own.

Let's say none of the strategies here work seem for you right now. Then don't just take out a mortgage. Instead, consider renting for some time while you sort things out.

Renting is also possible in order to save up. Although you're not building equity while renting, you also won't have repair costs, so you can save on these. Moreover, it's entirely possible to find a great deal on rent. Renting part of a house from someone, renting from Christians, renting a mobile home, or renting something that's not too close to town are all ways that could potentially save. If you're handy, you may get a discount for doing repairs on a house. Landlords want good tenants. I know that some are willing to give substantial discounts for the right tenants.

Another option is renting to own. In this case, when someone hopes to buy a home, they first enter into a rental agreement with the homeowner. During this time, a portion of each month's rent goes toward buying the house. At the end of the lease, the renter has the option to buy the home.

5. Housing that comes with a job.

Rather self-explanatory: Some jobs provide housing. Consider these. Also, consider bartering as a way to pay for housing.

6. Price first, location second.

Location, location, and location are the three biggest things that affect the price of a home. I know this personally: I've worked on small houses (2-3 beds, 1-2 baths, and all about 1,000-1,300 sq ft) that were extremely expensive ($250-350K) and large houses that were a lot cheaper (e.g., a 5 bedroom house that sold at way less than this). I've also worked on houses that an investor picked up for under 10K each.

You don't need to live in super dangerous areas to find a deal. Just be willing to compromise a little on the commute and you'll find plenty of decent places with good prices.

Let's say that instead of a couple putting $25K down for a mortgage, they buy a 25K house (perhaps they've saved up for three years to do this). Maybe it's not in the nicest area of town, but if they save $700 a month for three more years, they'll have saved $25K more and be able to consider a $50K house. Fifteen years after the first $25K house, $125K will be saved and the couple can have a $150K house free and clear. They've now saved $700 each month for 18 years. The entire time, no interest is paid and the couple always owns their homes free and clear. For the next 12 years, instead of continuing to pay off a mortgage, they can give to God's kingdom, save up so they can leave an inheritance, or do many other good things.

7. Downsize.

Although location is vitally important, size also does affect a home's price. If someone is willing to buy a smaller home at first, enough will be saved so they can buy a larger home later, as in the above example. Consider what's really needed.

8. Buy small and build an addition.

It may be strategic for a family to buy a house that's too small for them. Why? Because it may be possible to save a lot on the price and then build an addition (or a garage or some type of storage building) for relatively cheap. If a porch can be closed in, a basement finished, or a garage converted to living space, it may not be too expensive. It would be important to talk to someone handy and getting quotes before doing this, though.

9. Buy a fixer-upper.

It's possible to find extremely cheap housing this way. If you're handy, you could save tens of thousands of dollars by buying a house in disrepair and fixing it up. I've seen many houses that are on the market for well under $50K due to being in disrepair.

A few recommendations: If you're not an experienced renovator, ask the input of someone who is knowledgeable. On the one hand, with some ambition and the internet, it's definitely possible to a large percentage of the work yourself (a lot more than some people would say), or to receive good deals on labor if you shop around. The prices seen on fixer-upper shows on TV are usually ridiculously expensive and unrealistic. But on the other hand, be aware that the work is hard and usually takes longer than expected, and there are almost always unforeseen costs. Be realistic; be confident.

10. Be patient and negotiate well.

Combined with the above strategies, this works superbly, but even on its own, it's strong. If you search diligently and are very patient, eventually a possibility will appear. Let's say you have a small budget and cannot find anything, but then see a few houses that are listed for $10K above your budget. Chances are that one of those homeowners is motivated to sell. Don't be afraid to make what seems to be a low offer. I know from experience that sellers really, really want to receive offers, even if lower than expected. Cash offers are especially strong. If it's turned down, no harm is done. If it's accepted, awesome!

11. Team up with others.

If Christians would work together, many strategies are possible. A couple examples:

Pool savings. For example, let's say you have 10 families that are currently paying on average $1,000 a month for rent. Let's further assume that on average, each one is saving $250 per month to buy a house. Finally, let's assume each one wants to buy a 90K house. One of those families will save $3,000/year, but with ten of them, that's 2.5K/month and 30K/year. Alone, it would take someone 30 years to save that up, but with everyone pooling, let's look a what happens:

• Pooling $2,500/month, it takes 36 months to buy the first house. Then $1,000/month is freed.
• Pooling $3,500/month, it takes 26 months to buy the second house. Another $12K/year freed.
• Pooling $4,500/month, it takes 20 months to buy the third house.
• Pooling $5,500/month, it takes 16 months to buy the 4th house.
• $6,500/mo. = 14 months for 5th house.
• $7,500/mo. = 12 months for 6th house.
• $8,500/mo. = 11 months for 7th house.
• $9,500/mo. = 10 months for 8th house.
• $10,500/mo. = 9 months for 9th house.
• $11,500/mo. = 8 months for 10th house.

All in all, it takes 13.5 years instead of 30 for everyone to have a house, and that's with rounding up on the required months. If some of the people didn't need $90K houses (and some needed more expensive ones), then, if the less expensive ones are bought first, the process is sped up.

This also works for getting out of mortgages. If people who have mortgages would do this, targeting the smallest balances first (similar to Dave Ramsey's debt snowball method), it could go even faster.

Help others as you are able. Avoid a lone ranger mentality.

Let's say a father has $100K sitting in the bank. If he buys his kids a house, he will have saved them lots of money in interest (had they taken on a mortgage) and given them a huge jump forward financially. If they merely paid him back as they were able and then gave some extra in gratitude, everyone would be better off. However, even if he doesn't ask them to pay him back, everyone can still benefit: If they are kind like him, then if he faces health problems in the future, they will help him out, and everyone wins. Or, they could take what they'd be paying in a mortgage and start a business, possibly making lots of money. Or they could help others be free by giving to people who are saving up.

If you're blessed financially, whether it's because you've saved in the past, because you're young with few responsibilities, or because you're in retirement, be willing to be generous and help others (Ephesians 4:28). It may be impossible for some people to save much and engage in pooling resources, so be willing to help them. If you give a large amount per month (or a large one-time chunk), you can kickstart the above strategy. Will you make a direct return on it? Perhaps, because the strategy does save those involved a lot of money, but isn't helping God's kingdom grow the first priority? Socialism obviously is evil, but freely giving is blessed.

There are many ways to works with others, but a good starting point is likely within your immediate family. Be creative, cooperative, and of course, careful: Put everything in writing and follow Matthew 18 if things go wrong.

12. Use retirement/other savings to buy a house.

This is fairly self-explanatory.

Let's consider a specific case, though: Imagine you owe a mortgage (even a totally legit, private one) on a house with 5% interest and also have a retirement account that generally earns more than 5% interest per year. If this is the case, should you consider paying off the mortgage with the retirement account? Yes. Why? First, avoiding debt is good and encouraged by the Bible; don't try to outsmart God. Second, no return on investment is 100% certain. If your investment fails, you could lose your house.

13. Build a house.

I'm not experienced in building a house from nothing, but I've read of other people doing it successfully while avoiding debt.

14. Camp out, live in an extended stay hotel, or live out of a van.

These might seem a little crazy at first, and definitely not for everyone, but some people might consider them temporarily. One advantage of them all is that they're very portable.

• Camping out in a camper (or even a tent, which people have done for thousands of years) could save you a lot.
• Living in an extended stay hotel will save on expenses that come with a house (utilities, theft by property tax, lawn care, internet, etc) and it appears that some people actually do it and save.
• Living out of a van is something that people have done, and would seem cheap.

Even if these don't sound that nice, they could be done temporarily to enable saving.

15. Mobile Homes.

These are often very cheap. I've seen several for under $10K (usually these are on a lot that requires rent). I have also seen many that are free for whoever will move them. Moving a single wide is often around $2.5-3K for a local move while a double wide is twice that. Of course, you'll have to find land to put it on (or rent a lot), connect to utilities, and install a septic tank.

Even if you don't want to live in a mobile home long term, if you live in one for a few years while saving, you will (with God's blessing) soon be able to afford a nicer home.

16. Start saving early, radically.

If you save around $100/week, that's $5,000/year. Doing this for a few years will add up quickly. If you start saving right after (or during) high school and increase your level of saving as your pay (Lord willing) increases, you can have a good chunk set aside by the time you're married. Of course, even if you're older, it's not too late to save. Start doing so early rather than later.

Be frugal. Say no to unnecessary purchases and look for ways to save on necessary purchases.

Two caveats: First, God calls His people to rejoice and spend some money on rejoicing. Don't go to such an extreme when saving that you become a slave. Instead, do so in balance. Otherwise it'll be tempting to pendulum swing and start being reckless. Second, your money is God's, so if you see an urgent need, be willing to meet it. If your family needs help, for example, give to them rather than saving, trusting that God will reward you for it.

17. Buy a house as an investment.

The idea here is such: You find a great deal on a house but don't have enough money to buy it, so you find an investor to pay for a part of the house. You agree with the investor that when you move out of the house, he will receive a portion of the sales price. You'll likely need to have an agreed timeline for when you'll move out, which makes this a temporary idea, but it could definitely be doable. If you're handy and can fix up a house while living in it, all the better.

Another idea works as such: You, and possibly an investor, buy a large house (maybe a duplex) and rent part of it out.

18. House share.

This is similar to the pooling of savings above, except that in this case, two families share a house temporarily to further savings.

19. Be creative.

The above ideas are by no means exhaustive. Your situation may enable unique strategies. Ask God for wisdom, gather the facts of your situation (what you earn, what you need, etc), brainstorm, narrow options down, and then implement.

20. Talk to others.

Want to learn of other possibilities? Then talk to others. Tell them that you're looking for ways to have housing without going into debt and ask if they have any ideas. Maybe you'll hear disbelief from some people, but you'll also likely hear inspiring stories, ideas you haven't considered before, good advice, and possibly someone who will pray for you or help in other ways.

Conclusion:

I believe there are many ways to have housing without a mortgage. It may not be easy, but it's doable. The benefits are worth it.

Edit to expand on the above: If you have a biblical, generational vision, the benefits become even more clear:

Let's imagine that you save $100K during your lifetime by not taking out a mortgage. Let's also assume that you have 7 children and 49 grandchildren who do the same thing. Altogether, that's 5.7 million dollars that won't go to stealing bankers and can instead go to advance God's kingdom. Just imagine how much this could multiply into (a compounding effect) if put into productive uses!

Further, let's assume that because of avoiding a mortgage, a couple is able to give 1 day per week for 10 years for kingdom causes. Together, they'll have given 1,020 days in service. If their kids and grandchildren do the same, there will be 58,140 days given in service to God's kingdom. That's about the same as six people working full-time for forty years.

What a grand picture! I can only wonder at what wonderful things could happen if lots of Christians started doing this. This is only one area of life. If God's word is followed in all areas of life, who can guess what millennium blessings would result!

That's the end of this series. I hope you enjoyed it and that it helped you. May God be glorified!

Do you have another strategy? How about a story of doing this? Please share it and encourage others. My family is currently in process of what (Lord willing) will be a testimony that the above is possible. Lord willing, when I have my own family, we'll do the same. And so on, down through history. May God be praised!