Suppose I wanted to buy a home outright (for cash)?

Question

Suppose I wanted to buy a home outright (for cash) without a mortgage. What steps would you advise?

Answer 1

That is one option for the purchase of a home.That way you will have the house free and clear.

Very few people to include the extremely rich do this. The reason is they become equity rich and money poor. You have no tax advantage so you can not deduct the interest or points and other fees that is normally deducted on you federal income tax from getting a mortgage. (Check with your tax preparer or cpa for all tax advise)

Now if you got a mortgage with a 10-20% down or even with no down you can have a shot at both worlds, Your money would be safely in the bank drawing interest, while you would be making monthly payments with a tax write off.

You did not say how old you were, but if you still have earning years to go, then keep your money in the bank or invest it in a very good product and let it draw interest, get your house and deduct the interest and fees you are charged.

So let's see a house with money in the bank or just a house?

I hope this has been of some interest to you, good luck.

"FIGHT ON"

Answer 2

Sometimes it isn't wise to pay cash for a home. Financial advisors will tell you that it ties up your assets into the housing market. It's like buying a stock that you can't sell if you need the cash. (www.crown.org)...good money management site.

They advise that you leave some money for easy access and other opportunities.

Don't let people say you won't have a "tax advantage"..haha, there are no advantages when you pay 100% of the interest and end up getting 28% of it back? That makes no sense at all. Paying interest sucks.

If you have other money to set aside for "liquid assets", go ahead.

Get an appraisal done, let the seller split the cost with you so you know you are paying market value (or less, yippee). Put this as a restriction in your Offer to Purchase (if the appraisal comes back lower than the agreed upon price, the deal is off). Get a house inspection (good in all cases), again the offer being contingent on an "acceptable" inspection (by you).

Title Company to close it...you should be all set!

Answer 3

There are plenty of good financial reasons to have a mortgage on your property but being able to bail out and lose only your down payment is not one of them. You are responsible for that mortgage whether or not the development tanks. A mortgage is not an insurance policy it is a loan that you have to repay. Foreclosure is devastating both financially and emotionally. One reason you might want to have a mortgage is that it is a very low rate source of financing. Mortgages are tax deductible, at least for now. If you can invest the money extra money that you will have in your possession as a result of the loan at a greater return than the interest rate of the loan then you actually create wealth. If you planning on just keeping money in a bank account earning .5% interest it would make better financial sense to pay cash for the house. A mortgage really needs to be a part of a financial plan when you are lucky enough to have the potential to pay cash.

Answer 4

Home Inspection! Read your Title Report.
Appraisal only if you would like to know how much equity might be in the property but if not save yourself the $350.

Everything else should be paid by the seller. These transaction go fast so make sure you tell the Title Company and Listing Agent what you are trying to do. If the property is occupied this will give the occupant ample time to move out. Closing could happen as fast as 5 days.

Answer 5

1 - Choose a Realtor.
2 - Don't choose a loan officer.
3 - Choose a house.
4 - Do inspections.
5 - Close.
6 - Live happily ever after.

The End.

Answer 6

show up at the door with a suitcase full of money

And if you are interested, I have a house for sale in Florida, 3,2,2 retirement community, adjacent to golf course, centtral Florida, we have yet to experience a severe frost this season. My grass is still green