One of the big benefits of home ownership is also the tax deduction that you receive for the interest you pay yearly on your mortgage. So take into account the value of having that additional tax deduction if you need it vs keeping the money in your possesion and keeping the interest on that. Also if you run into any difficulty financially it could be time consuming to get a home equity loan to get some of that money out of the house. It really all comes down to what your personal needs are. Sometimes the tax benefits of a mortgage outweigh the benefits of not having to pay a monthly mortgage payment. It is only a decision that you can make. Good Luck.

From the perspective of a real estate agent, the only benefit in paying cash is the possibility of a slightly better deal on a home and the possibility of a smoother transaction. The benefit can be translated into a quicker settlment, as mortgages require more time 30-45 days. A seller, who is anxious to settle quickly may discount the home price when weighed against the possibility of a quick cash settlement. Likewise, because you are not dealing with a lender and their documentation procedures, it may be more hassle-free for you. Expect that a condition of your accepted cash offer be a requirement that you place the full amount in escrow up to settlement - assuring the seller that the funds will be available at settlement. Because their will be no lender appraising the home, be sure to include an Appraisal addendum to the contract and then get the house appraised! You'll want the assurance from the appraisal that you're not overpaying for the home.

You should contact an accountant to weigh any tax consequences.

Ellen Kellner, Hershey
EKellner@PrudentialHomesale.com

Equity

If you are renting, it is like depositing money into a shredder. Granted home values can decline as we all have seen, owning a home basically forces you to save. Whereas renting, you will not ever see any % of that money back. So paying all cash basically makes you put a lump sum into an investment vehicle which can get you a return over a number of years without having to deduct your loss from paying interest.



Sean Dawes