Should I Pay Cash for My Home?vegasho.me /1ivFkWE

The number of homes purchased with cash in LasVegas reached 60% at the peak of the investorf renzy. This is trending down in 2014. January andFebruary had 47% cash purchases. In March, 43%of the homes sold were cash deals.

Why Should You Pay Cash For yourHome?

No Financing Available – There are some types ofproperty which can’t be f inanced. Many of ourcondominiums do not have f inancing available. Banks shy away f rom complexes if there islit igation. That rules out many condominiumproperties where the HOA has sued the developer. Lenders dislike having more than 50% of theproperties occupied by tenants. This makesf inancing impossible in a lot of our condocomplexes.

Financing dried up in the high rise market in 2008 when banks realized it might be over built. We areseeing some buildings where it is now available. Financing is still unavailable in high rise buildings withlit igation and condo hotels.

Buyers using FHA loans are especially limited when buying a condo. Few complexes have maintainedtheir FHA approval rating. Mortgage Expert Tim Lucas recently announced “FHA May Allow One Of f‘Spot’ Approvals Again“. FHA f inancing f or condos may become available in the f uture. It would be ahuge boost to the Las Vegas condo market.

Price – If you’re in a posit ion to buy with cash you may be able to negotiate a better price. Sellerspref er cash buyers because they don’t have to worry that a buyer ’s f inancing may f all through at thelast minute.

No Appraisal Needed – Cash buyers don’t need an appraisal contingency. This is a big advantagein an improving market where appraisals have not kept up with property values.

Quick Closes – Cash buyers can close quick. This part has been especially usef ul in negotiatingprice on a cash deal. Sellers with a high monthly HOA or mortgage payment may f ind a buyer who canclose quick appealing.

No Monthly Mortgage Payment – Paying cash means no monthly mortgage payment. You own thehome, not the bank, the credit union or the investor who bought the mortgage.

For many, especially retirees who may be living on a limited income, this security is the priority. This

can be a great idea if you also have enough cash reserves to cover emergencies.

Why Should You Finance Your Home?

Most buyers do need a mortgage. If you do havethe f unds available to buy with cash, there may beadvantages to obtaining a mortgage.

Low Interest Rates – Today’s interest rates arestill at a historical low. You can borrow moneymuch cheaper than you’re likely to be able toborrow in the f uture. Is there an investment thatwill earn you a higher return on your cash than theinterest you would pay on a mortgage?

Cash Reserves – If you pay cash, will you haveenough reserves to cover your living expenses in case of an emergency? It ’s always better to have alitt le cash on hand. If the home’s price would wipe out your savings, you should consider a mortgage. This is especially true f or the elderly. While they may qualif y f or a mortgage at low rates today, ratesmay not be f avorable tomorrow.

Tax Advantages – This is a matter to discuss with your tax preparer or estate planner. Themortgage interest f or your primary home may be used as a deduction on Federal taxes. Tax savingsmay f avor using a mortgage rather than paying cash.

Jumbo Loans – Luxury homes are of ten sold to cash buyers. Today’s low interest rates makejumbo loans appealing to the af f luent. For more detail on jumbo loans, read Inlanta Mortgage “Coulda Jumbo Mortgage be a Wise Move f or High Net Worth Individuals?”

Should I Pay Cash for My Home?

This is a question that has a dif f erent answer based on your personal situation and the home youare buying. Discuss the pros and cons with your f inancial advisers as well as a lender. Today’s lowinterest rates may give you a lower monthly payment than you expect and may allow you to buy thehome of your dreams.

Debbie Drummond is a top-producing Realtor in Las Vegas. Planning to buy or sell your Las Vegashome? Call (702)354-6900 or email Debbie@LVHomePro.com