Cash is King...Or Is It When Buying A Home
Hi and welcome to another two minute Tuesday.
If you've seen my previous videos, you know I bring valuable topics to homeowner,
home buyers & home sellers. Check back every week to see a new video.
They say “Cash Is King”....or is it?
Should you purchase your home for all cash, or is it better to get a mortgage?
In 2018, 23% of home buyers paid cash for homes!! That’s an amazing statistic. And in my market of Orange County CA, 29% of homes have no mortgage at all.
ADVANTAGES:
Easy to get offer accepted.
Fast transaction (especially for the seller).
No appraisal or loan contingencies are required which will lengthen the sale if you’re getting a mortgage.
And there's no Credit check required.
Alternatively, You could use a large portion of your cash and get a small mortgage with a favorable rate and no PMI which would preserve some of your cash.
DISADVANTAGES
You could use all of your money to make a purchase - but no cushion for repairs, emergencies.
You can't diversity or leverage your money for other investing
Your Money is tied up and not liquid...but you could get a home equity loan,HELOC or reverse mortgage if fast cash is needed.
ALTERNATIVE to using ALL of your CASH?
Your money could be diversified into other investments - stocks, mutual funds or a business opportunity.
Buy multiple houses or multi-unit building. Everything from a duplex to an apartment building.
Another option is to buy the home for cash and then finance it after recording - takes advantage of your cash position to make the purchase, then gets your cash back when you get a mortgage.
So here's my warning...
Before you make any decisions about using all cash for a purchase, talk to your financial consultants, CPA, CFP, or Aunt Betty to satisfy yourself that you are making the right decision.
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Check back next week for another episode of Two Minute Tuesday...
And I'll see you on the next video.
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