Weigh the pros and cons before you buy a home for cash. You can avoid mortgage interest entirely, yet you won't have a home loan tax deduction.
If you want to buy a home for cash, you are among a small minority of buyers who save for what they want instead of buying with credit. A number of benefits exist if you have the liquid funds needed to purchase a home with cash. Nonetheless, cash transactions have a few associated drawbacks that need to be considered. Knowing both the pros and cons of a cash purchase can help you make an educated decision about whether paying for your home in cash is a smart move in your particular situation.
Paying cash for your home is an excellent way to avoid the interest fees you would incur with a mortgage. You can save thousands of dollars in interest over the life of your loan when you buy a home with cash. You will also save by cutting other costs associated with a home mortgage, such as origination fees and private mortgage insurance.
Additonally, you may be able to negotiate a lower price for your home if you purchase it with cash. A motivated seller may offer you a discount because the sale can close quickly. If the seller needs to relocate or avoid foreclosure, your cash offer can be a huge bargaining chip.
Click here for free real estate listings in your area.
Having the ability to buy a home for cash also gives you an advantage at home auctions. When you buy homes that are auctioned due to foreclosure, seizure or estate sales, you must make a cash deposit or pay the entire purchase with cash.
When you buy a home for cash, there are some drawbacks. You cannot get a tax deduction from mortgage interest if you don't have a home loan. This can be a sizable deduction if you itemize your personal income taxes. Additionally, if you invest your money in real estate, it may be difficult to liquidate if you find yourself in need of cash. You would probably have to go through the process of getting a home equity loan.
After weighing the pros and cons of buying real estate with cash, you can get free property listings at Reply! Reply! is also an excellent resource for real estate professionals in your area who specialize in cash sales and foreclosure sales. To find information about home auctions, watch your local newspaper's legal notices section for Notices of Sale.
Photo credit: AMagill via Compfight CC.