If I pay cash for my home--will that impact my closing costs? What are the advantanges/negatives?

Asked by Ron Brooks, Harrisonburg, VA Thu Sep 27, 2007

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Pam Winterba…, Agent, Danville, VA
Sat Sep 29, 2007
All your real estate loan fees would be non existant. No impound account. You will save on interest over the loan haul.

No tax write off but you will own your home free and clear.
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Sylvia Barry,…, Agent, Marin, CA
Thu Sep 27, 2007
Hi Ron,

If you pay cash for your home, it might give you advantage when presenting the offer to the sellers - knowing the problems with the lending practices, it is nice to have the safety of a cash offer - no loan contingency -, you might be able to negotiate a better deal on the house.

same as Erin said, you will not have to pya for loan-related fees, but you will still have to pay for appraisal fee if you want to have an appraisal done (which usually comes with getting a loan) so you save certain home purchase expense by paying cash.

You will save the hundereds thousands of dollars if you get a loan for 30 years, but on the downside, you will lose the write offs on your interest (especially if you have nice income, you'd want the write offs), you will lose the opportunity cost of the cash you put in the house (you can invest the money and might make more money than save on the interest you are paying), you will have a safety net if needed.

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Erin Stumpf…, Agent, Sacramento, CA
Thu Sep 27, 2007
If you pay cash, you will not have to pay any loan-related fees, such as origination, points, pre-paid interest, etc. which generally make up a large chunk of a buyer's closing costs. It is likely however that you will still have to pay for certain property taxes, transfer taxes, notary fees, recording fees, etc.
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