Financing in Port Townsend>Question Details

Murphy, Home Buyer in Orange County, CA

What are the pros and cons of purchasing a house for all cash vs. banking the cash, financing the property

Asked by Murphy, Orange County, CA Sun May 17, 2009

and making the payments from the bank account?
Assume there is no other need for the cash and this purchase will be our retirement home.

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There a two reasons to purchase for cash in your situation. First, it's probably earning less than 4% in your savings account and mortgage interest is 4.75%. Second, you can definitely negotiate a lower sales price with a cash offer. The downside is that financial situations can change and you may need some of the cash that's tied up in your retirement home. If you don't have an adequate income stream you may not qualify for a refinance or home equity line of credit and find yourself in a bind.
0 votes Thank Flag Link Mon May 18, 2009
Not knowing your financial portfolio it is a difficult question to answer for you. I would seek the advice of a financial counselor if you don't already have one. As far as the purchase goes the only thing that a loan gives you is an appraisal required by the bank. You can certainly order one yourself, it is presumed to be a buyer's cost, and make your purchase and sale agreement subject to the property appraising at the sales price.
0 votes Thank Flag Link Mon May 18, 2009
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