Home Buying in Charlotte>Question Details

jenniferpaso…, Home Buyer in Mount Pleasant, NC

If we purchased a home paid in full are there any perks to doing it that way? ups and downs of doing it that way so to speak

Asked by jenniferpasour, Mount Pleasant, NC Tue Jan 14, 2014

Looking in Mt Pleasant to purchase home Cabarrus county taxes?

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The perks are no mortgage and no mortgage interest also much lower closing costs for the transaction and the ability to move quickly which could be attractive to some Sellers and could result in some saving on the actual purchase price depending on the Seller and their situation. The negatives are that if you are still working it may be to your advantage to have the tax write offs that come with having a mortgage. This is a question for a tax accountant.
1 vote Thank Flag Link Wed Jan 15, 2014
Paying Cash for a home eliminates the headache of dealing with the Mortgage Companies. It will also save you money in the long run, as you won't have to pay interest on your mortgage. This isn't as much of an incentive as it used to be when interest rates were higher, but you would still be cutting out a significant payment.

However, you also have to gauge how much you are willing to spend on a house, being sure to leave money aside for any inspections, repairs, or long term living expenses.

Hope this helps!
0 votes Thank Flag Link Wed Jan 15, 2014
Hi Jennifer,

Dave Dicecco said what I wanted to say though I have one thing to add. I don't know if you are going to need cash for anything else later or if you will still have reserves of cash or savings that you can tap. It needn't be an all or nothing situation--you could take out a 50% loan and still have cash for other projects or investments (or fun things like travel). Later, if you want to do a cash out refinance because you need the funds, the rate will be so much higher, and the lending qualifications become so much more stringent. It might be worth getting some measure of a loan for convenience. Just a thought.

Vivian Olkin, aka CrazyViv
Keller Williams
Web Reference: http://crazyvivhomes.com
0 votes Thank Flag Link Wed Jan 15, 2014
Hi Jennifer,
I say go with the cash purchase if you don"t need the money for living expenses.
I would like to help you find the right home you are looking for. Call me at 704-408-8285.
THANK YOU EDITH LOVETT
0 votes Thank Flag Link Wed Jan 15, 2014
Perks of paying cash for a Home:
1) Can close in about 10 days. (30 days for a loan to process)
2) If, you get in a bidding war on the Home, usually cash and close in 10 days will win the bid.
3) Never worry about a mortgage payment.(just responsible for the taxes and ins.)

Downs)
2) If that is your only cash, you won't have a cash back up for anything.
3) A mortgage does help your credit score.(good if you pay on time, bad if you don't)

Hope that helps you in your decision.

Helping families for 29 years.

Candace Ellis
Ellis Group Realty, Inc.
0 votes Thank Flag Link Wed Jan 15, 2014
Paying in cash gives you peace of mind, no monthly mortgage expense. It also makes closing a lot faster. I hope that I answered you question. If not, would be so kind to explain your question in a bit more detail? I live in Cabarrus County , I am very familiar with Mt. Pleasant. I would welcome the opportunity to assist you in your new home search. Please feel free to contact me.
0 votes Thank Flag Link Wed Jan 15, 2014
Jennifer,

Buying a house cash has it's pros. Some believe you should have a mortgage because the interest rates are so low that you can invest the money you would have spent on the house and get a better return on it than what you would be paying in interest.

In addition there is the current tax benefit that comes with it. Being able to write off the interest that you pay on the mortgage is like borrowing the money for well below the current rate you would be paying.

The other school of thought is paying cash for a house allows you some financial flexibility and freedom of knowing you do not have that bill hanging over your head every month and the money you would have spent on a mortgage payment you could invest. Though you would not get back the same return because your increments would be smaller over a longer period of time.

I think it comes down to personal preference and what you are comfortable with. I currently have a mortgage on my home but am working very hard to pay it off by paying extra into the principle every month. I look forward to the day I am mortgage free...Some people like the tax write off. I want the security of knowing I do not have that debt..

Ultimately I would talk to an accountant that does your taxes and see if there is a benefit for you based on your financial situation one way or the other.

Dave diCecco
Realtor/Broker
Helen Adams Realty
Cell: 704-519-7895
ddicecco@helenadamsrealty.com
http://www.davedicecco.com
0 votes Thank Flag Link Wed Jan 15, 2014
Hello Jennifer,

Another factor to whether a buyer should pay cash for a real estate investment depends on how easily and quickly that real estate may be sold in the future. If you own a duplex that has no problems renting either side, then pay cash. But, if you are talking about a 100 acre farm that is in a remote rural setting where there are few buyers, then maybe not. What is the marketability of the home that you are speaking of?

i agree with all of the other answers given. It might help you to sit down with a financial analyst or a mortgage broker and/or a stock broker to understand your financial opportunities. This is a great question that you posed on Trulia. I hope to see it on Google.

Robin Faison, broker
Keller Williams Realty
0 votes Thank Flag Link Wed Jan 15, 2014
The obvious, significant financial benefits are not to be ignored. However, they are only beneficial IF you make that saved money work for you. That is important. What would you do if your realized the money you borrowed would be LESS EXPENSIVE than using cash!!! Much depends on what your money is doing for you now!
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The right answer for you will depend on your future plans. For instance, if you were intending to make a few real estate purchases, replace the carpets, cabinets, paint and resell, you would be better off financing the first house (this house) and paying cash for the second.
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Your goals, situation and circumstances are essential to a proper answer.

Best of success.
0 votes Thank Flag Link Wed Jan 15, 2014
Jennifer. The only other tthing that I would add is that paying cash for a property will also make it possible to pursue some distressed properties that may not qualify for some loan programs due to condition. I recently had a farm in the County Line Rd area that had a few items that caused problems in obtaining the loan. If I can be of assistance let me know.
Have a Great Day!
Alicia Buchanan
NC Broker Realtor
Market Street Realty
704 906 7211
msrbroker@gmail.com
0 votes Thank Flag Link Wed Jan 15, 2014
There are often insurance advantages to purchasing outright as well. Not sure if Mount Pleasant has hurricane issues (though it sounds like it's far from the coast!!), but these advantages can be significant if you can opt out on high priced insurance like flood and wind...
0 votes Thank Flag Link Wed Jan 15, 2014
There are often insurance advantages to purchasing outright as well. Not sure if Mount Pleasant has hurricane issues (though it sounds like it's far from the coast!!), but these advantages can be significant if you can opt out on high priced insurance like flood and wind...
0 votes Thank Flag Link Wed Jan 15, 2014
Larry has provided you with a great response to your question. One item I would like to add to his answer is to consult with your financial advisor as well. As interest rates are STILL near their historical lows, you may want to look at simply obtaining a modest loan in order to invest the remaining money.

Let's look at a hypothetical situation where you are purchasing a $200,000 home. By obtaining a mortgage for 100k and financing it for 10-15 yrs, you may prefer the benefit of deferring the cost of owning that home in its entirety as well as profiting from the investment of $100k if you feel confident enough that you can generate a rate of return on your investments > 4%.

AS the overall economy continues to recover it's truly a question of personal preference that depends upon your own financial situation and circumstances. The benefit of this low rate environment IS that one may defer the cost of home ownership by fixing that cost at these historically low levels in order to plan for a more comfortable future.
0 votes Thank Flag Link Wed Jan 15, 2014
Peace of mind. Living without that debt over your heads would be incredibly empowering. If you are looking for a more tangible perk, consider how much money you will save over the next15, 20 or especially 30 years depending on how long of a mortgage you were to get. Also, you will not have to pay PMI but of course you only have to pay off 20% of the mmortgage to reach that point.
0 votes Thank Flag Link Tue Jan 14, 2014
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