Should you pay cash for real estate if you can? Or is it best to finance your home?
Have a financial game plan. Does owning a home free and
clear fit into your financial picture? And if so, will buying the home with
cash now affect you in the future? If you plan for the future now you can help
avoid any downfalls later. Paying cash for a property makes sense if you are
trying to avoid paying for any loan fees or settlement costs.
So what to do? Evaluate your circumstances before buying any
house with cash. Make sure that you have enough cash reserves to cover- funds
set aside for retirement, emergency funds in a savings account, insurance for
health, life, and disability.
Paying cash for a property can limit your liquidity,
especially if you have kids you are sending to college or assisting elderly
relatives with living costs. And don’t forget that a home without a mortgage is
a home without a tax deduction. It might just make more sense to use your cash
to pay off non-deductible credit obligations than putting that cash into a
home.
And finally, as yourself how does a mortgage factor into
your investment financial picture. Are there other investments that could be of
greater financial yield with a similar amount of risk?
Before making any decision, it’s wise to consult with a
financial professional to help you evaluate the dollars and sense of buying a
home with all cash. In today’s world, where many homeowners are cutting back on
expenses rather than incurring new ones, owning a home free and clear may just
be financially and mentally liberating.
Your Local San Diego Real Estate Expert,
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