The Cronin Team: Your Mortgage Guide

All Cash - Q & A

Q: What about an all-cash offer?
A: Although most home buyers could never buy a property with all cash, anyone considering such a move (or who has bought a lottery ticket lately) may be wondering how to approach such a deal.

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 fees, 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 investments which are paying off and determine if spending cash on a home is worthwhile.