Cash vs. Mortgage
While buying a home with cash may seem like a dream come true, it may not always be the smartest choice. There is much to consider when deciding to purchase a home outright with cash versus taking out a mortgage.
The Advantages of Purchasing a Home Outright with Cash
The biggest advantage to paying for a home outright with cash is that it eliminates the need to pay interest on any loan and eliminates substantial closing costs, such as mortgage origination fees, appraisal fees, or other lender fees.
It is attractive to sellers when buyers pay in cash since they do not have to worry that financing will be denied and they must find a new buyer. Also, a home purchased outright with cash typically closes faster than a home purchased with a financing.
Obtaining Financing to Purchase a Home
Financing a home also has significant benefits. By financing the purchase of your home, you do not tie up substantial cash you may need for major repairs, renovations or emergencies. Having this unspent cash will broaden your options and allow more freedom in your choices.
There can also be tax implications when buying a home with cash. Mortgage interest payments are often tax-deductible, and a reduced tax burden is always welcome. But saving on mortgage interest by paying cash may not always make the most financial sense. Counterintuitively, a buyer may actually be worse off by paying cash than if the purchase was financed when the tax deduction is taken into consideration together with the possibility of reaping greater interest and dividends if those same funds were invested,
Making the Decision
Buyers paying with cash may choose to barter with the seller to obtain the property for a cash discount, since a cash transaction is more likely to close.
When you are considering whether to purchase a house outright with cash or finance it, it makes sense to opt for the choice that will give you the greatest comfort. Ask yourself which option will provide a greater return on your investment and which option will give you the greatest peace of mind. Everyone should make their own choice.
If paying with cash, be sure you will have enough cash to cover the property taxes, homeowners insurance, and homeowners association dues. If you do decide to take out a mortgage, be sure you can afford the principal and interest payments each month.
Richard S. Weinstein
Richard S. Weinstein is the real estate attorney you want to hire to help you with the home buying process. He is an experienced attorney who can help with any stage of the real estate process whether you are paying outright with cash or taking out a mortgage.
With over 50 years of experience as an attorney, Richard S. Weinstein assists clients with the important financial situations in their lives. Whether you are dealing with bankruptcy, real estate (both commercial and residential, including short sales, foreclosures, and title insurance), estate planning, probate, business formations, or sales or mergers, Richard S. Weinstein is the attorney with the education, experience, and knowledge you need!
Call us at (561) 745-3040 or visit his website at rweinsteinlaw.com.
Law Office of Richard S. Weinstein, P.A.
250 S. Central Blvd. #101
Jupiter, FL 33458
Phone: (561) 745-3040
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