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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Mortgages
- Q & A Q: What about an all-cash offer?
A: Although most home buyers could never buy a property
with all cash, anyone considering such a move (or who has bought
a lottery ticket lately) may be wondering how to approach such
a deal. Because buyers sidestep the tedious and time-consuming loan
qualification process, the deal can close very quickly. In addition
to fewer hassles and a better position in price negotiations,
the all-cash buyer's primary advantage is completely avoiding
mortgage interest, which can total hundreds of thousands of
dollars over the life of the loan. Buyers also save money that
would be spent on loan origination fees, required appraisal,
some closing costs and various other charges imposed by the
lender. At the same time, all-cash buyers should consider potential
pitfalls of the transaction. Buyers who want to use the home
as their primary residence lose out on many of the tax advantages
available to homeowners with conventional loans, since the IRS
allows home owners to deduct all mortgage interest on loans
up to $1 million. If you can afford to pay cash but are concerned about price
appreciation, you may be better off obtaining some financing.
Also, look at other which investments are paying off and determine
if spending cash on a home is worthwhile. |