4 Ways to Buy Your Next House Without a Mortgage

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Are you a no-debt person like me? Have you dominated your finances over the years and even found a way to pay off your house?! That’s awesome! But here’s the thing…Let’s say you’ve paid off your house, you don’t want to go back in debt….but you want to move. How on earth can you buy your next house without a mortgage?

I mean, sure you have equity in your home and you might have a nice pile of cash in your savings to put with it, but how can you sell your house and get the equity out of it to pay for the next house? Is it even possible?

How to Buy Your Next House Without a Mortgage

This is the question Liz and I are asking ourselves lately. We have our primary house near the city as well as our two rentals – all of which we own outright. We’d like to sell our primary residence and buy our next property in the country…without taking on a mortgage.

Why are we so dead-set against against taking on a mortgage? Two reasons:

  • I absolutely hate debt – It makes me uncomfortable and I continually think about what could happen if I lose my job and can’t pay the loan. My life is so much calmer and peaceful without it, and I’d like to keep it that way.
  • It’s a complete hassle – The bank wants copies of work paystubs, they need an appraisal, they charge thousands of dollars for closing, the process takes forever, and you have to sign like, 200 sheets of paper before you can get your house. Buying a house without a mortgage is so. much. nicer. Believe me.

So how can you dodge the mortgage when you’re buying your next house? There are four main ways to do it.

Related: Should You Pay Off Your Mortgage Early?

buy your next house without a mortgage1) Sell Your House, Rent, Then Buy The Next One With Cash

If you want to want to buy your next house without a mortgage, this option has the least logistical barriers, but it’s also the most inconvenient because it requires two moves.

The process is simple:

  • Put your house on the market
  • Find a buyer
  • Sell it
  • Live in a short-term rental while moving all your stuff into storage
  • Seek out your next place, buy it, and move all your stuff into your new home

Simple…but also not very convenient. My wife is NOT a fan of this option because she hates moving. I definitely don’t blame her.

2) Sell Your House and Rent It From the New Buyers

This option of buying your next house without a mortgage is a little bit more inventive than option one, and it allows you to make just one move instead of two.

Here’s the process:

  • Put your house on the market
  • Find a buyer
  • Let them know you’d like to live in the house (even after they purchase it) while you look for your next house
  • You pay them rent (since it’s now their house) until you close on your new place
  • Once you close and move into the next place, you stop paying rent and the new buyers officially move into the house you’ve sold

This option of renting your home after selling it is known as a rent-back agreement and it works well if your buyers aren’t quite ready to move in or are in really no hurry (or if they just like the idea of having a rental income for a few months to line their pockets with!). With this option though, expect to pay a little bit more than the typical rental rates (my estimate would be a 10%-20% mark-up) since it’s an added convenience to you and a likely inconvenience for your buyers.

3) Buy Your Next Home Contingent on the Sale of Your House

Here’s yet another option to buy your next house without a mortgage – setting up the contract to buy it contingent on the sale of your current house. This is typically more popular during a buyers market and houses are moving slowly (which probably wouldn’t work so well today), but you never know what the sellers will agree to until you ask!

Here’s the process of this option:

  • Put your house on the market
  • Start looking for your dream house
  • Find the next house you’d like to live in, put in an offer, but make it contingent on the sale of your house
  • If the seller agrees, continue to search out a buyer for your house
  • Sell your house, then close on the new house and move in

4) Save Up the Cash and Pay For It Outright

This option is by far the most difficult and takes the longest amount of time, but it is still possible.

The process is simple (but again, not easy):

  • Stay living where you are for a while – make due with what you have
  • Live on far less than you earn and save like crazy for a 5+ years
  • Then put in an all-cash offer on your next house

Yes, this option of buying your next house without a mortgage takes longer, but the all cash option is the most appealing for sellers. The closing is quick, they know the deal won’t fall through, and they won’t have to hassle with the bank either! And, as we all can understand, a bank-less experience is the best experience.

Related: Why You Should Pay For a House With Cash

Will You Buy Your Next House Without a Mortgage?

So what do you think? Will you use one of these options to buy your next house without a mortgage?

Again, here are your options:

  1. Sell your house, rent an apartment, and buy your next house
  2. Sell your house, stay there while renting, and then buy your next house
  3. Buy a house contingent on the sale of your house
  4. Save up the cash for an all-cash buy

You’ve worked so hard to get the bank out of your life. I say keep them out! Choose from one of the options above and buy your next house with cash!

Which option would you choose? Will you buy your next house without a mortgage?

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2 comments to 4 Ways to Buy Your Next House Without a Mortgage

  • There are a couple of additional ways to buy your next house with cash. For one, you might consider downsizing from a larger, more expensive home to a smaller one you can buy with cash. This may mean giving up a detached, single-family home and moving into a townhome or condo; attached housing is usually less expensive. This method probably is most do-able if the home you’re in has seen its value rise strongly during the time you’ve owned it.

    Another idea is to relocate from a more expensive housing market to a less expensive one. If your career situation is fluid, you might look well outside your existing market; there are great places to live where housing is pretty affordable for even folks of modest means. For example, home prices in Cleveland OH are about half what they are in Austin TX; homes in Riverside-San Bernardino CA are about 35% less expensive than are homes in the Los Angeles metro area.

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