When buying a home, if you are financially able, is it better to pay for the home in full, or would it be better to make payments even though you have the funds to BUY the house? My wife and I have come into a large some of money and are going to be moving in the next year. Anyone have any good financial advise out there? We are looking to spend anywhere from $175,000 to $250,000.
2007-12-29 06:57:58 · 11 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Pay cash for the house if you can afford to do so. The tax deduction isn't worth it. The MOST you can pay in federal tax is about 35% of taxable income, and that means you get back thirty five cents of every dollar you pay in interest. You're wasting the other sixty five cents.
Furthermore, as a married couple, you get a roughly $10,000 standard deduction anyway, so the first $10K of interest you pay is worth NOTHING in deductions.
2007-12-29 09:47:28 · answer #1 · answered by acermill 7 · 0⤊ 0⤋
Good fortune! I see two issues
1. if you buy outright you dont get the tax deduction that comes with a large debt and you dont get the credit reporting agency to note how timely your mortgage payments are made. This boosts your credit score and keeps rates down for future loans.
2. This requires a good investor - If you believe you can earn more than the mortgage interest through an investment, it would be better to take the loan and invest the difference. eg; if you could find a good bond paying more than the mortgage rate, you would be better off buying the bond.
Emotionally, most people would like to pay off the house and at least know that this is secure for life - probably my choice too.
Congrats!
www.yourpropertypath.com
2007-12-29 07:11:42 · answer #2 · answered by Anonymous · 1⤊ 0⤋
A financial adviser wants to play with your money, so their advice should be taken with a grain of salt. It all depends on your financial goals and age. You pay for a home three times over when financing. on the other hand, you could be bringing in close to 10% every year on investments. My opinion? your money is safe there. Do the calculations and come up with a down needed to get the rate you want and put the home on a 15 year note. Invest the rest. Some of your money will be safely in RE and the rest will make money for you and be more liquid. always account for inflation when making long term decisions. Just my two cents
2007-12-29 07:47:26 · answer #3 · answered by Anonymous · 2⤊ 0⤋
Buy it out right!!!
My home is paid off and I could sell it for about $225,000. If and when I ever move, I am going to buy another house and hopefully be able to pay for it in full using that money.
Making payments means paying interest - not a good idea if you can avoid it!!!
2007-12-29 08:27:46 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Check the interest rates for home loans verses investment accounts. If you can earn more through investing the money than you would be paying in interest on the loan, invest. If the interest on the loan is higher, buy outright, then you will have equity that you can borrow againt in the future.
2007-12-29 08:47:32 · answer #5 · answered by Don't Panic! 6 · 0⤊ 0⤋
First of all it's currently a ''buyers market'' (meaning it's a good time to purchase). Second, borrow the money using the savings as collateral. Your interest on the loan (mortgage) will be tax deductible, that makes it nearly ''free money''.
2007-12-29 07:02:34 · answer #6 · answered by Anonymous · 1⤊ 0⤋
Either pay off the house or put it in a retirement fund such as a 401 k or a Roth IRA. You will have to retire one day. Never too late to prepare for retirement.
2007-12-29 07:06:55 · answer #7 · answered by no name 4 · 0⤊ 0⤋
frequently that's the broking who will pay the fee to the realtor, not the customer. If the broking would not use a realtor and passes the fee low fee rates directly to you, it may well be maximum suitable to purchase from the landlord. fairly some cases somebody won't use a real assets agent yet nonetheless asks as lots for the living house.
2016-12-11 16:01:08 · answer #8 · answered by Anonymous · 0⤊ 0⤋
I'd buy it outright--you will still be able to deduct real estate taxes--much more beneficial than buying something that will end up costing you double. Voila--instant equity--great credit! Collateral. Wow wish I could do it!
2007-12-29 07:02:10 · answer #9 · answered by Stacies Mom 5 · 0⤊ 0⤋
I have done it both ways. I much prefer the security of owning the house outright. That way I know that if I lose my job I still have a roof over my head.
2007-12-29 07:06:03 · answer #10 · answered by Sharingan 6 · 1⤊ 0⤋