Originally Posted by brokencycle
I'm convinced. I'm going to give up my mortgage, and go live in a studio apartment for $400 a month, and I'll put my $800/mo in the bank earning zero percent (the extra I would have spent on my mortgage) until I can save up enough to buy my house in cash. That way no bank is holding me hostage. In 21 years, I'll be able to afford a $200k house, which if we assumed a 3% average inflation, would be a $100k house today, so as long as house prices don't appreciate and my rent doesn't go up, I'm golden.
In Europe this is pretty common. Many don't acquire any kind of property until late into their 30's. Ask GreenFrog about it, he's the resident expert on Spain.
As I mentioned above, the savings would go into some vehicle able to earn a return. And $800 a month isn't much to save. For a $200k house the savings rate would need to be about 2k a month, in which case it's a 4-5 year cycle. That outright purchase would save you $150k in interest for the lifetime of the mortgage - almost the price of the home itself. The mortgage ladder is a sucker's game.
A home purchased outright gives you the ability to move there, continue saving and perhaps purchase a rental property outright in another few years. Now you are earning a return + savings which means you can repeat this cycle numerous times while it accelerates. This is exactly what my father did, who retired at 53 and has never worked a day since. His properties eventually get passed to me, instead of all life's work being siphoned off to a bank.
Another example is my 27 yo brother in law. Instead of buying a house, he bought a duplex. Then 2 years later he sold and bought a 4 plex. That property already earns him a return and he lives for free in a 1br apt. At 27.
Back to your point, if all you can really save is $800, the more intelligent path might be to bring a down payment that can easily be converted into rental income in the face of hardship. So for example if the property is rentable for $800 a month, you'd need create a mortgage that is somewhere below that. Rough math says a $50k down payment would do it, followed by a full on pay down until the property is owned outright.