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Paying Full Price? |
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I want to know what are the disadvantages of purchasing a house by paying the full asking price
(or a negotiated price) in full. Is it better to carry some type of mortage on property I will be residing in? |
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If you're prepared to pay all cash, you can sometimes negotiate a lower purchase price. That's because you're offering the seller some advantages. Your deal will be sure from the start, not dependent on any mortgage loan approval. You probably won't be asking the seller for help with closing costs, which are lower for the buyer who doesn't need to place a mortgage.
As for whether it's financially advantageous for you to pay all cash--that's an individual matter, and I don't know anything about your situation. One thing: don't pay much attention to people who tell you it's good to carry a mortgage because you can take a tax deduction for the interest you pay. No particular financial plan is right for everyone.
I can tell you this: if you pay all cash, you're investing your money for about a six percent return, because that's what you're saving by not borrowing the money. Only you can decide if that's better than whatever else you'd be doing with your cash. |
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Edith
Originally published on July 23, 2008 |
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