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How To Pay Off Debt & Buy Your Next Home, With the Same Monthly Payment

How To Pay Off Debt & Buy Your Next Home, With the Same Monthly Payment

Inflation over the last year has been rough on the monthly budget!  While the Federal Reserve is raising rates every month, it feels like your buying power is being quickly eroded. High interest rates may have scared you away from buying a home, but a home purchase could actually help you get out of debt AND get you into your next home...all while paying the same or less in monthly expenses. Here’s how:

Get Rid Of High Rate Debt AND buy a home at the same time

Let's face it, credit cards have rates up to 29%, debt consolidation loans have rates into the high teens, and all other forms of credit have rates that go up every time the Federal Reserve raises rates(almost monthly).  The only rate that doesn't rise is a 30 Year Fixed Mortgage Rate. The best action you can take, is to have all of your debt wrapped into one mortgage loan at a fixed interest rate!

Home prices jump during periods of inflation, and even more when the rates come back down! While rates are high currently, this is the best time to buy your next home if you are wanting to move to a different location for any reason (closer family/friends, move closer to your new job, the reasons are vast).  So why not sell your current house, pay off all your debt, and buy your next house?  Did you know that you can buy your next house for 5% down on a Conventional loan, or 3.5% down on an FHA loan?  YOU CAN.  If you buy a home with a fixed rate and a term of 30 years, your monthly payment will stay the same with no increases for the next three decades, and you will have the rest of your debts paid off! Plus even as food, gas, and entertainment costs rise, you will have locked in your largest monthly expense, preventing it from ever jumping again.  

Home Values Appreciate Over Time

During times of inflation, it's smart to park your money in assets that are proven to increase in value in the long run. Single-family homes are just such an investment. They have a great historical record of gaining value. Inflation actually works in your favor once you are a homeowner as it pushes home prices higher, increasing your equity without any work on your part. As long as you plan to stay in the home for a significant amount of time, you can plan to see home value appreciation that will result in big profits when you finally decide to sell.  Be in the house that you really want to live in and watch your value increase over time.

Lock In "Tax Free" Capital Gains & Reset The Tax Clock 

Once you have owned your current home for 2+ years as a primary residence, the IRS will allow you to sell and not pay capital gains taxes on the first $250k or $500k depending on whether you are married.  AND, there is a proposal in the government to possibly raise these amounts over time.  YOU CAN PAY OFF YOUR OTHER DEBT WITH TAX FREE MONEY AND RESET THE CLOCK ON YOUR NEXT HOME TO HAVE TAX FREE CAPITAL GAINS AFTER ANOTHER 2+ YEARS! 

Your income will increase each year, and it should increase your spendable income due to your only debt being a FIXED Rate mortgage. The mortgage payment becomes a smaller percentage of your money equation. Meanwhile, your home value is increasing, making it a win-win scenario financially.

Marry the House, Date the Rate

Your house will always be your house!  Interest rates are expected to move down within the next year, and you are able to refinance to a lower payment on your next house as soon as the time is you even more monthly savings due to the lower rate and payment you will have at that time!

Houses will continue to spike higher in value because there is a national housing shortage of over 1 million homes (more human to house ratio).  Now is the time to lock yourself into your next home before the crazy bidding wars start up again once rates start coming back down.  Don't miss the boat by waiting too long, and still having the other annoying debt payments!

If you are thinking of buying your next home, give us a call today to discuss your plan. We can help!