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 costs,
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.
