is it better to pay cash..or make payments on a desired property?

Asked by Shaunda, Moreno Valley, CA Wed Dec 12, 2012

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Valerie O'Brien’s answer
Valerie O'Br…, Agent, Newport Beach, CA
Wed Dec 12, 2012
Excellent question. First do you have a good financial advisor?
IF you pay cash then the only costs you have yearly are taxes and insurance and possibly HOA's. One most also put aside money for future repairs(you can start by putting $300/month or so away)?
Interest rates are low so depending on your financial situation you may want to use that money to purchase a home and an income property and maybe pay them both off in 15 years. Then you would have passive income on the rental for as long as you own it.
One should do some serious thinking about their options.
So I suggest talking to your financial advisor and picking an agent who can find the right properties, understands the market and help you make that decision.
There is not enough room here to go into great detail.
I would be honored to answer your questions and help you in your search.
Best regards,
Valerie O'Brien
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Libardo Quin…, , Newport Beach, CA
Wed Dec 12, 2012
Hi Shaunda.
it depends, if I have the cash I wil pay cash. Now if you are an investor finance.

NMLS 380933
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John Markowi…, Agent, Huntington Beach, CA
Wed Dec 12, 2012
That's a very good question. And the answer really depends on numerous factors. Goals, Age, Income status, etc. Let's look at both aspects.

If you were to pay your house off, a benefit is that you will have no mortgage payments. You will only owe property taxes (and HOA if applicable). But you will loose out on what investors know as leverage. Essentially there is an opportunity cost of keeping your money tied up in your home, a home that will appreciate (or depreciate) if money is in it or not. The opportunity cost is that the money could be used elsewhere for something else (that could potentially make you money also).

Also, as others have pointed out, rates are really good now. Why not take advantage of the low interest while you can.

However, if your older and/or looking to retire, perhaps on a fixed income, then paying off your house might be synonymous with your goals. Again it varies with what you want to achieve. Hope this helps.
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thank you John..I am trying to avoid payments...and I am retiring so payoff works best for me
Flag Wed Dec 12, 2012
Carol Lee, Agent, Corona del Mar, CA
Wed Dec 12, 2012
This question is a great one - there are a few different aspects to it.

If your offer is competing with others for a property, all cash works well. Don't expect a substantial discount off the asking price for it, (if any at all), but if you are all cash it's definitely a plus. In Newport, many buyers are all cash.

With interest rates so low, many of my clients who can afford all cash are buying with a loan to take advantage of the low cost of money and the opportunity to leverage this investment.

When paying all cash, there are financial consequences that you should address with your CPA before finalizing this decision.
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Annette Law…, Agent, Palm Harbor, FL
Wed Dec 12, 2012
When purchasing a Five Million Dollar property, there are many more issues to consider in regards to securing financing. Certainly not a solution you will find at Bank of America or Wells Fargo.
What is best for you depends on your investment plans.
Is this the ONLY real estate you will be purchasing? If yes, this is a good time to take advantage of LOW borrowing rates.
If you intend to make additional purchases or already have other real estate financed, you may need to use a different strategy.
You will find it beneficial to discuss your goals, situation and timeline with a real estate professional who has experience at this price point. They will be able to direct you to additional resources that have a historical record of delivering on their promises on time, under budget and professionally.

Give a New Port Beach Ca real estate professional a call.
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Joe Homs, Agent, Laguna Hills, CA
Wed Dec 12, 2012

If your question is really if you should pay cash for a home or finance the property, I would have to recommend that you finance the property to the level where you are comfortable making the payments. We may never see interest rates this low again in our lifetimes. Why would you pay cash when you can borrow at less than 4% and use the other money to work for you? Borrow as much as you can and don't look back.

Joe Homs, Realtor, Investor
Web Reference:
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Deborah Lind…, Agent, Irvine, CA
Wed Dec 12, 2012
Hi Shaunda,

You definitely have a better chance at negotiating a price when you pay cash. It puts the seller in a better position with a quick closing and no appraisal issues. I am seeing a lot of properties in Newport selling for a lot less with cash buyers. I would be happy to send you some recent sales or assist you with your home search, let me know!

Deborah Linden
Prudential CA. Realty
DRE# 01768219
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Alex Vargas, Agent, Irvine, CA
Wed Dec 12, 2012
Hello Shaunda,

In my opinion you'll have more leverage paying cash. In doing so you'll perhaps get a better price on the estate you wish to purchase.
If you were to finance, you might have to find a portfolio lender to offer any type of Super Jumbo product, also depends on how much you'd be putting down.

If you'd like more information feel free to email/text/call me.


Alex Vargas
Weichert Realtor
DRE # 01332235

(714) 269-8775 Mobile

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