Mortgage or Cash
 

Read a article that says that about fifty percent of sales this year nationally were in cash compared to approximately thirty percent last year. Does this hold true in the villages and does a cash buyer have more of a edge? I understand that homes seem to sell faster here than other areas, opinions would be appreciated, thanks.

If I read the same article many of the cash buys nationwide were attributed to entities scooping up residential properties at depressed prices to rent and/or resell.

Probably a large percentage of properties in most 55 and over communities are sold to retirees who are cash buyers.

Paying cash worked for us - it definitely motivated the buyer! It might have been a bit less than the buyer wanted/hoped for - but - it was guaranteed and for real - no one between buyer and seller. Took us 3 weeks to have a home inspection and closing!!!

Cash will benefit you on a resale; however, with a new property I believe the only thing it will accomplish is a quicker closing.

the only differencebetween cash and mortgage is time....end result for the seller/buyer is the same.

It Depends
 

I know a lot of you will disagree, but I favor a mortgage under the current situation where borrowing money is cheap. If you are making more on your investments than the cost of money, which you should e i today's market, you lose by paying cash.

Smart post
 

Tom, IMHO the smartest post regarding cash/mortgage so far on this Thread. Money is still cheap and with interest rates likely to rise in the next few years---mortgage makes sense.

100% agree with you and why we elected to keep a mortgage. Much further ahead financially at the end of any period one can measure. Three point two (3.2) percent mortgage rate and returns on investment 9% and above dependent on risk.....what was he question?

To each his own. I preferred no mortgage and invest the rest. Unfortunately, I did not expect the government to bring the interest rate to zip-nada-none.

I am still ahead in peace of mind.

Z

I'm with you, Z. As long as one can buy when real estate prices plummeted and became a buyer's market as we did. I can say I have probably earned more on the value of my home/land than I have with my investments since we purchased.

cash or mortgage on new home is the same amount of days....the old saying is use OPM when interest is so low

the house I sold before moving here was paid off. However, with mortgage rates so low, it made sense to me to take a mortgage for the reasons others mentioned. I put the money in a relatively conservative Vanguard account and watch it carefully. I figure the interest I make can be put for future repairs. As long as I'm ahead, I'll keep the mortgage. Since Sept. already made 4% on that money...mortgage is 3.6%. Of course, it the market starts tanking, I'll pay the mortgage off.

Hope this isn't too far off topic. Curious if anyone kept a mortgage for the tax advantage.

That is exactly what our salesperson told us when we were looking to buy, we opted for a mortgage instead. Thank you for the responses, it is appreciated.

I agree with Z. Depends where the money is invested right now, cash makes sense. I lost through stocks more than 50k in one year (year end count).

Tax advantage? is your tax bracket over 100%?

There is no right or wrong and peace of mind is a relative state, per individual.

With the recent past performance of the stock market, i would not recommend investing the cash instead of paying off the mortgage. You could loose the ability to pay off your mortgage if the market crashes again as it did in 2008. Investing the money would be good only if you can still afford the mortgage payment without the investment income. Very risky to play with the house money at this stage of our lives. Remember, past performance is no guarantee of future performance. I would keep the mortgage if I were 25 years younger.

Yepper
 

I agree!!!...............take any five year period over the last thirty years and the stock market return have been more than twice the cost of mortgage money.

:boom::boom:

Any 5 yr period ? Hmmmmmmmm

:-)
 

:d :d :d

Maybe I should have said for the mortgage interest payment tax write off advantage. And to answer your question, no my tax bracket is a smidge under 100% :D

Mortgage interest on one's personal residence or a second home is normally only deductible as an itemized deduction and is therefore deductible to whatever degree with various limitations such as a million dollar loan limit on a purchase mortgage and $100K on a home equity loan. The Pease limitation, AMT and other issues such as whether or not one receives income on tax exempt municipal bonds may enter the picture. One might wish to consult their CPA or tax attorney to determine whether such conditions may apply.

If you pay $100 in interest and are in a 30% tax bracket , it seems to me that you are still out of pocket $70. If you have cash and are earning at less than the mortgage rate , your net income would be higher by paying down the mortgage unless you are in a 100% bracket. Or, unless you are able on a consistant, long term, no risk basis to exceed the mortgage rate on investments.

Is my logic flawed?