Reasons Not to Buy Your House with Cash

Reasons Not to Buy Your House with Cash

Make sure you understand the caveats of buying a home with cash.  

You just found your dream home. You decide to forgo the bank and associated mortgage paperwork, break out your checkbook(or rather get a cashier’s check or wire funds), and purchase the home outright. Although paying cash is still a far-fetched dream for many people, it’s becoming more common in the real estate market. If you’re thinking of paying for your home with cash, be mindful that it may not always be the right option.

  • Loss of liquidity

Generally, it’s not wise to purchase a home with cash if you have just enough liquidity to pay for it. Cash is important to have on hand for unexpected disasters, such as a new roof or a medical emergency. You need to have some sort of a backup safety net in case you lose your income.The larger the safety net the longer and/or better you are covered when an unexpected dilemma arises.

  • You may qualify for a solid mortgage

If you have enough cash to purchase a home outright, lenders will likely view you favorably for mortgage options.Often when steady income is absent it may be thought that you can’t qualify.  However, when you have significant assets and are of retirement age, for example, the assets can be calculated as qualifying income.  Options do exist depending on the overall circumstances.

  • You miss out on a tax break

All homeowners with a mortgage receive a tax break on the interest paid to the lender. The interest you accrue when you pay on the loan is huge. If you choose to pay for your home in cash, you miss out on this tax break.

When you’re looking to buy a property and fund your dream home, contact Andraya Coulter. I serve the Bay Area and the entire state of California and Texas with quality, suitable home loans!


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