My husband and I are having a debate: can you really buy a house cash as a military family after you retire out? People say you can, but we just can’t figure out how it could work!
Thanks, Britney in DC
Good news, it is totally possible to retire out of the military and buy a house cash. However, it depends on two things:
- Where do you want to retire and
- How dedicated you are to not wanting a mortgage.
Where are you wanting to buy the house?
If you want to live in the NYC area, LA, or Hawaii it will be very hard. But almost any other part of the country I think it is achievable.
Here are three houses, one outside of Sacramento CA, one in Dallas TX, and one in Manchester NH. All three are under $255,000 for 3 beds, 2 baths and between 1,400 and 2,200 sqft of good quality modern houses. If you live outside of the major metropolitan area or adjust what you need it could be even less, or get even more.
The hard part is number 2.
How dedicated are you to buying a house cash? You didn’t give me any personal information on your finances, but I can give some examples how it could happen.
Using $255,000 as the amount you need, let’s say you have 15 years. (Your first five years in the military are crazy enough without thinking about buying a house cash one day). $255,000 saved over 15 years is $1,420 a month (rounded up). A longer time frame or less costly house will make this monthly number even smaller.
Can you save $1,420 a month? Probably not as a one income family, however if you got a job when your kids are in school and make $24,000 a year you could. Your whole salary would have to go to this dream, but it is very doable. You just have to want it bad enough.
Family would have to come see you instead of “going home” every year.
You would have to run your car for years, buy big items used and prioritize every purchase. After all this hard work you are going to come out far ahead.
The $96,000 difference!
Option A: For a $255,000 house you can save $1,420 a month for 15 years and buy it cash. After this time you own the house outright!
Option B: What about a 15 year mortgage? With the current rate of 4.5%, 15 years for a $255,000 house will be $1,950 a month. You will pay $351,132 total for the $255,000 house. This is $96,132 in interest you will be paying.
Either way you will owe property taxes and have insurance costs. Option B will get even more costly each month when you add those in. Option A will just get cheaper, you’ll be so used to saving $1,400 each month, that a couple hundred will seem like a breeze.
To wrap it up:
Yes you can buy a house cash, if you want to. You just have to make that your money goal. Or you can pay a bank $96,000 for the privilege of not having to save now. Your choice.
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