Robert G. Allen on Saving $100,000 On Your Home
Save $100,000 on Your Next Home : by Robert G. Allen
One
of the most important principals of creating wealth is to own your own
home.
The median price of a home in North America is about $136,000.
The average
family pays full retail price for their average home without thinking
about the
enormous financial consequences of their decision.
Your house will be the BEST or the WORST financial decision of your life!
Let me show you how to pay wholesale prices for your next house.
It's easy when you know how.
Let's take a simple example:
A
$100,000 house with a fixed rate mortgage of 8% will have mortgage
payments
of $733.76 for 30 years or 360 months for a total of $264,155.
In other words,
$100,000 principal payments
$164,155 interest payments
$264,155 total payments for house
Technique 1 - Never, EVER pay retail for Real Estate
There
are 9 ways to find bargain properties that you can buy at wholesale
prices.
I go into detail on these 9 ways in my new book, Multiple Streams of
Income
(Wiley & Sons, April 8, 2000).
Using one of these methods, you set a goal to
buy your next house at least 20% below market.
Iím assuming that youíll also
buy it with little or no money down using the ideas in my all time best
selling real
estate book, Nothing Down. Therefore,
youíve saved $20,000 by using patience
and some bargain hunting skills.
Technique 2 - lower price gives you an immediate lower monthly payment
Not
only will you save an immediate $20,000, but look at what happens
over the
life of the loan. By buying
right, your new loan will be $80,000 instead of
$100,000. This will lower
your monthly payments from $733.76 to 587.01.
That's
an immediate monthly savings of about $150. Not bad. Over 30
years, this
amounts to $52,830 in interest savings!
Now you can see how just a few smart
money decisions can have enormous impact on your financial future.
But let's not
stop there.
Technique 3 - Negotiate the lowest interest rate!
Is
it worth the hassle to shop around for a ‡% to 1% lower interest rate?
Let's run the numbers. If
you could get your mortgage for 1% less, your
mortgage payments drop to $532.24...or about $55 less per month.
Over 30
years this amounts to almost $20,000!
Is that worth a few extra hours of
shopping? Every 1/2%
drop in interest saves you $10,000.
Seller financing
can be even more exciting than bank financing.
Technique 4 - Own your home debt free in half the time!
One
of the most popular loans today is the 15 year mortgage.
There are even
10 year mortgages. I
don't recommend either of these loans.
I recommend
instead that you get the traditional 30 year loan...for the sake of
flexibility...but
that you voluntarily increase your monthly payment to the bank in
order to pay
off your loan much faster. For
example, the previous example had monthly
payments of $532 on an $80,000 mortgage over 30 years.
By increasing your
payments by only $187 per month, you will pay off that loan in 15 years
instead
of 30. And save yourself
those last 15 years of payments. This
will save
you $95,000!
Technique 5 - Save $3,000 every time you buy or sell
There
are 27 ways little known ways to lower your closing costs and save at
east $3,000 every time you buy or sell a piece of real estate.
We go over
many of them in our Streams of Cash Newsletter. So be sure that you sign
up for our newsletter today!
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