{"id":4932,"date":"2017-02-21T10:10:44","date_gmt":"2017-02-21T18:10:44","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=4932"},"modified":"2017-02-15T17:59:10","modified_gmt":"2017-02-16T01:59:10","slug":"buying-a-home-cash-vs-mortgage","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/02\/buying-a-home-cash-vs-mortgage\/","title":{"rendered":"Buying a Home : Cash vs Mortgage"},"content":{"rendered":"<p style=\"text-align: justify;\">Everywhere you turn, you hear how bad it is to carry around debt. So naturally, it\u2019s logical to think that buying a home with cash \u2013 or sinking as much cash as possible into your home to avoid the massive debt associated with a financial health.<\/p>\n<p style=\"text-align: justify;\">But there\u2019s a lot to consider when contemplating purchasing a home with cash versus obtaining financing via a mortgage.<\/p>\n<p style=\"text-align: justify;\"><strong>Cash Cuts Costs \u2013 And Wins Bidding Wars<\/strong><\/p>\n<p style=\"text-align: justify;\">Paying cash for a home eliminates the need to pay interest on the loan and many closing costs. \u201cWhen buying a house with cash, there are no mortgage LLC, headquartered in Chicago.<\/p>\n<p style=\"text-align: justify;\">Paying all cash can also make your purchase offer more attractive to sellers. \u201cIn a competitive market, a seller is likely to take a cash offer over other offers because they don\u2019t have to worry about a buyer backing out due to financing being denied,\u201d says Peter Grabel, managing director, MLO Luxury Mortgage Corp in Stamford, Conn.<\/p>\n<p style=\"text-align: justify;\">A cash home purchase also has the flexibility of closing faster (if desired) than one requiring financing, which could be attractive to a seller. Those benefits to the seller shouldn\u2019t come without a price. \u201cA cash buyer might be able to obtain the property for a lower price and receive a \u2018cash discount\u2019 of sorts,\u201d says Grabel.<\/p>\n<p style=\"text-align: justify;\">Also, a cash buyer\u2019s home is not leveraged, which allows a homeowner to sell the house more easily \u2013 even at a loss \u2013 regardless of market conditions.<\/p>\n<p style=\"text-align: justify;\"><strong>Mortgages Can Also Make Sense<\/strong><\/p>\n<p style=\"text-align: justify;\">Obtaining financing also has significant benefits. \u201cEven if a buyer has the ability to pay cash for a home, it might make sense to not tie up a lot of cash to purchase real estate,\u201d says Grabel. Doing so could tie your hands down the road. Thus, by opting to go with a mortgage, you can give yourself some more flexibility in some cases.<\/p>\n<p style=\"text-align: justify;\">&#8220;Cash buyers need to be sure to leave to leave themselves plenty of credit score will look like in the future, how much the home will then be worth or other factors that determine approval for a mortgage.<\/p>\n<p style=\"text-align: justify;\">Selling a home bought with cash could also be a problem if the owners stretched a lot financially to buy it. \u201cIf cash buyers decide it\u2019s time to sell, they need to make sure they will have sufficient cash reserves to put down as a deposit on the new home,\u201d says Grabel.<\/p>\n<p style=\"text-align: justify;\">Paying cash also has tax implications. \u201cIn most cases, mortgage interest payments are tax deductible,\u201d says Semrad. The reduced tax obligation may be an advantageous way to finance the house.<\/p>\n<p style=\"text-align: justify;\">Depending on the state of the stock market, Semrad also notes that saving on mortgage interest by paying cash might not be financially prudent. You could be making less than that money might have earned had you taken out a mortgage and invested the cash you didn&#8217;t spend on your house in the market.<\/p>\n<p style=\"text-align: justify;\">Not having a mortgage could also negate a homestead exemption if you find yourself seriously\u00a0 in debt in the future. Most states grant consumers a certain level of protection from creditors regarding their home. Some states, such as Florida, completely exempt the house from the reach of certain creditors. \u201cThat means, regardless of the value of the house, creditors cannot force its sale to satisfy their claims,\u201d says Semrad.<\/p>\n<p style=\"text-align: justify;\">Other states set limits ranging from as little as $5,000 to up to $550,000. Here\u2019s how it works: If your home is worth $500,000 and the home\u2019s mortgage is $400,000, your homestead exemption could prevent the forced sale of your home in order to pay creditors the $100,000 of equity in your home as long as your state\u2019s homestead exemption is at least $100,000. If your state\u2019s exemption is less than $100,000, a bankruptcy trustee could still force the sale of your home to pay creditors with the home&#8217;s equity in excess of the exemption.<\/p>\n<p style=\"text-align: justify;\">Having a mortgage won\u2019t completely protect your money, however. \u201cIf a homeowner left the funds in the bank and financed the house, a judgment creditor could lien the bank account and use the majority of the funds to satisfy its claims,\u201d says Semrad.<\/p>\n<p style=\"text-align: justify;\"><strong>The Bottom Line<\/strong><\/p>\n<p style=\"text-align: justify;\">The best advice when considering which option makes the most sense is to opt for the choice that gives you the bigger bang for your buck. Also, ask yourself which will provide the greater return on your investment.<\/p>\n<p style=\"text-align: justify;\">\u201cPaying cash for the full purchase price of a house is similar to investing in a bond that pays the same interest rate you&#8217;d pay with a mortgage,\u201d says James Bregenzer, owner of Bregenzer Group LLC, a private equity and capital management company in Indianapolis, Ind. For example, opting to not pay a 30-year mortgage with a 5.5% interest rate is essentially the same as realizing a 5.5% return on the investment price.<\/p>\n<p style=\"text-align: justify;\">If you decide to purchase a house with a loan, make sure you can easily afford the principal, interest, property taxes, homeowners insurance, homeowner association and other fees each month. And no matter how you pay for a house, make sure to have an emergency savings account equal to6 to 12 months of expenses in case your personal economy declines, and you need a financial buffer.<\/p>\n<p><a href=\"https:\/\/www.msn.com\/en-us\/money\/realestate\/buying-a-home-cash-vs-mortgage\/ar-AAmLAb1\" target=\"_blank\">Buying a Home : Cash vs Mortgage<\/a> by John Smith | MSN Real Estate<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Everywhere you turn, you hear how bad it is to carry around debt. So naturally, it\u2019s logical to think that buying a home with cash \u2013 or sinking as much &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/02\/buying-a-home-cash-vs-mortgage\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-4932","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Buying a Home : Cash vs Mortgage &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2017\/02\/buying-a-home-cash-vs-mortgage\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Buying a Home : Cash vs Mortgage &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Everywhere you turn, you hear how bad it is to carry around debt. 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