If you have the cash on hand to purchase a house, should you?PROS
No Credit History Required – As long as you have the cash in the bank, no one will question your ability to pay.
Risk Free Savings – If mortgage interest rates are higher than what you get on your investments, you gain by paying cash.
It All Belongs to You - You own the house free and clear. You have also freed up the money you would be paying on mortgage or rent payments to invest in other places.
Negotiating Power – With cash, there is no contingency on getting a loan, so closing can occur in a shorter period of time.
Investment Property – Second homes are considered investment properties and carry with them higher interest rates and penalties. If you are buying a home to fix and sell, it often makes sense to pay cash.
CONS
Less Liquidity – If you have all your liquid assets tied up into a house purchase, its harder to free that money up in the event you need it. If you need to get a mortgage at a later date it is considered a refinance and will carry a higher interest rate.
Tax Advantage – You are not able to take advantage of the deductible on your income taxes. Depending on your tax bracket, this could be a substantial amount.
Posts
I believe there are more advantages than disadvantages. Investors should just be aware of the real happenings in this industry. As more foreclosures continue to happen many are also making money from foreclosure. It does make a lot of difference to know a lot. Thanks for sharing. Good luck.
ReplyDeleteJenny,
ReplyDeleteI agree, that in this market, there do seem to be more advantages.