Home Buying in East Boston>Question Details

D.A.H. -, Home Buyer in East Boston, Boston,...

IF BUYING A HOUSE FOR CASH IS THERE A SET OF RULES TO CONSIDER ?

Asked by D.A.H. -, East Boston, Boston, MA Mon Jul 27, 2009

I AM CONSIDERING BUYING A HOUSE OR CONDO IN EAST BOSTON. I HAVE BETWEEN 100K AND 150K. SHOULD I MORTGAGE TO GET TAX BREAKS OR PAY CASH TO GET A BETTER VALUE AND DISCOUNT ON CLOSING? IS THIS AREA A SAFE RESIDENTIAL AREA, BETWEEN KELLY SQUARE AND CENTRAL SQUARE.
P.S. DO NOT QUALIFY FOR 1ST TIME HOMEBUYER.

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Hi Trav- Cash would be great. But you have to still pretend that you are a bank. Do all the due diligence that a bank would do. I can walk you thru a little of that if you'd like. I'm a mortgage broker, but also have bought a couple properties for myself using cash deals or seller financing. You still have to be smart to protect yourself and your new investment.
Yes, a RE attorney is key- but not the only key.
Home inspection is a must, but there are many kinds of home inspections and inspectors. I could give you a little advice on that if you'd like.
Feel free to contact me if you'd like. Thanks, and good luck,

Ken L.
0 votes Thank Flag Link Thu Jul 30, 2009
Cash is the king! When buying for cash do your home work, have a buyer's agent, do inspection (unless it is a tear down), have a good closing attorney.

As far as safe residential area goes, people have different criteria of what is safe enough for them. Trulia has a good info - you might want to browse through - just click on the Stats & Trends tab and you'll get to statistical data about East Boston. Play with it, compare with other neighborhoods that you already know, so you could get a feel for what these numbers mean. Have a happy house hunting!
Web Reference: http://www.boc-re.com
0 votes Thank Flag Link Tue Jul 28, 2009
Hi Trav,

I suppose the short answer is could you get a better return on your money elsewhere? The beauty of real estate is the leverage it provides as an investment. For example, if you were to put 20% down you would still receive appreciation on the entire value of the home. Over the long term that would be approximately 5% per year and on other people's money for the 80% you borrowed.

If you do buy cash remember that certain protections the lender builds into a purchase mortgage include an appraisal and title insurance are not automatic. You want to make sure you have addressed these issues.

Obviously there are advantages and disadvantages either way. You should check with your CPA or financial advisor to get the best answer for your situation.

The "Mortgage Professor" Jack Guttentag offers a free spread sheet that helps you compare the value of each approach. http://www.mtgprofessor.com/A%20-%20Purchasing%20a%20House/w…

Hope that helps.
Ronn@BuyersChoiceRealty.com
0 votes Thank Flag Link Tue Jul 28, 2009
Tray, I like to think cash is best. It gives you better bargaining power and costs less upfront. However, my accountant thinks otherwise. You should seek advice from a cpa based on your own financial situation. As far as safety, check with the local police precinct. That will give the facts, not just someone's opinion.
These answers add a little more upfront work on your part, but can save you money and grief in the long run.
0 votes Thank Flag Link Tue Jul 28, 2009
Trav,

My advice is to pay cash. A tax break in essence is really sending the mortgage company $1 so that you don't have to send the government $.40, that really doesn't make a lot of sense to me. If you really need a tax break you can always give your money to your church or _____ (insert your favorite non profit organization). You will also have the added benefit of having reduced financial risk and as an added kicker you will save some money on the closing.

Cameron Piper
#1 Trulia Agent in MN
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Mon Jul 27, 2009
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