Is Paying For A Home in Cash The Best Option?
One of the most debated issues in real estate is whether or not buyers should buy a home with cash. On the surface, it seems like the right thing to do, but some question whether it really is. If you are thinking of buying a home cash, it is important that you compare both sides of the argument before making your final decision.
Why Should You?
There are obvious advantages to buying a home with cash. For many potential homebuyers, not having a mortgage is possibly the biggest. When you pay upfront for your home, you free up monthly income that can be used in other areas.
You also save big on interest. When you take out a loan, you have to pay interest rates that adds thousands to the actual value of the home. Depending on your interest rate, it is possible that you could pay tens of thousands in interest.
Another benefit you might not have considered is that sellers usually love cash homebuyers. Instead of going through the hassle of worrying whether or not the lender will approve the funding of the home, you can negotiate for a better price with the seller and get the home you want. For the seller, that means no delays in getting his or her money.
Why Should You Not?
Although the idea of buying your home cash sounds appealing, there are some drawbacks that can impact you and your income. For instance, if you do not have a mortgage, that means you are missing out on a major tax deduction each year.
There are several possible tax deductions tied to buying a home, including the mortgage interest tax deduction. If you opt to get a mortgage instead of paying cash, you can apply the cash towards other credit obligations and help reduce those debts.
There is also the problem of taking out a future loan. When you buy a home cash, you lose the opportunity to build on your credit with the home purchase. If you do end up needing to take out a home loan down the road, it could be difficult to qualify since you do not have a history or paying mortgages.
If you are still unsure whether or not paying cash for your home is a good idea, consult with a full service real estate agent. Not only can the agent help with assessing the situation, but also help you find the right home for you and your family.