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Although most
home buyers could never buy a property with all cash,
anyone considering such a move (or who has bought a
lottery ticket lately) may be wondering how to approach
such a deal.
Because buyers sidestep the tedious and
time-consuming loan qualification process, the deal can
close very quickly. In addition to fewer hassles and a
better position in price negotiations, the all-cash
buyer's primary advantage is completely avoiding
mortgage interest, which can total hundreds of thousands
of dollars over the life of the loan. Buyers also save
money that would be spent on loan origination fees,
required appraisal, some closing costs and various other
charges imposed by the lender.
At the same time, all-cash buyers should consider
potential pitfalls of the transaction. Buyers who want
to use the home as their primary residence lose out on
many of the tax advantages available to homeowners with
conventional loans, since the IRS allows home owners to
deduct all mortgage interest on loans up to $1 million.
If you can afford to pay cash but are concerned about
price appreciation, you may be better off obtaining some
financing. Also, look at other which investments are
paying off and determine if spending cash on a home is
worthwhile. |
