Question Details

Laura, Home Buyer in 33952

Why isn't it a good idea to pay cash for a house? I can't get a mortgage because my credit isn't good.

Asked by Laura, 33952 Sun Oct 21, 2007

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Answers

8
Even with poor credit, you can get a mortgage with a large enough down payment. Getting a mortgage and making the payments timely will be a way to build good credit. If you can pay cash, why not buy w/ 50% down and search for lender who will work w/ you?
4 votes Thank Flag Link Sun Oct 21, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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If you have the ability to pay cash for a house why bother with a mortgage? If you don't have that ability and you can put 30% down, it is almost the same as buying a house for cash.

With 30% down, lenders look to the equity in the property and do not even look at credit.
3 votes Thank Flag Link Sun Oct 21, 2007
It's fine to pay cash for a house. A lot of time it's much more desirable for the sellers if a contract comes in without loan contingency - they would ask you to provide proof of funds

Some good things about NOT paying all cash - such as, you can improve your credit score, like Deborah said; you can use the extra cash and put into some good investments, hopefully make more money than paying for mortgage. some extra money for raining days.

Make sure you do save the extra cash insteat using it for none essential things.

When you get a mortgage, make sure you are able to handle the mortgage, insurance and all other expenses for years to come. Don't get yourself in a bind again!

Sylvia
2 votes Thank Flag Link Sun Oct 21, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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If you have the capacity to pay cash that is great but it does tie up a chunck of cash. If you have a substantial downpayment a lender may consider a loan. Over time that will assist you in re-establishing your self. Good luck.
2 votes Thank Flag Link Sun Oct 21, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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It is a good idea to pay cash for a house. You just have to be careful about giving a good first impression in your offer. Some people may be suspicious if you offer too high of earnest money without a financing contingency.
Ruth
2 votes Thank Flag Link Sun Oct 21, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Deborah and Ed are right on. TU!!!! It would be in your best interest to make a large down payment and get the loan to improve your credit scores. Sounds like a win win.
0 votes Thank Flag Link Tue Oct 23, 2007
Look at the option of putting down a substantial downpayment.

It really depends on if you need the cash, what other income you have, and so on.
Web Reference: http://iansellsnola.com
0 votes Thank Flag Link Mon Oct 22, 2007
Hi Laura, they say cash is king. But, lenders always like to see that you can handle the debt loan so in a way there is a negative impact.
0 votes Thank Flag Link Sun Oct 21, 2007
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