Cash vs Mortgage?
I'm relocating due to work and trying to decide if it's better to pay cash or get a mortgage? I just don't know if I would have enough interest and other deductions to overcome the standard deduction of 11,400 that we get on our income taxes. An 5 year ARM is about 3% and not many fixed income investments pay that today. I"m selling a house that is paid off and I have more than enough to purchase another house even without selling this one. I'm in the 25% tax bracket. by jeff_connors from Columbus, Ohio. Jun 18th 2011
Amy Wedig (amywedig)
#35 ranked lender in Ohio - 9 contributions
Hi Jeff! Thank you for contacting us and posing your question. The Arm rates are the lowest right now by far. They are in the 3's and we have several available for you such as t he 3/1, 5/1, and 7/1, basically the difference in these products in mainly the fixed rate period. They are all hovering around similar rates right now. We also have fixed rates for both 15 and 30 year products in the 4% range so now really is the best time to purchase a home. Prices are also very good right now and home prices are at historic lows as well. Let us know if we can help you any further. I am available to speak with you today if you would like to give me a call.Amy WedigCharter Mortgage Company614-257-8551
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions
You questions doesn't really give anyone here enough information to make a great response. Not only should you consider interest rate, and deductions, but you must also consider income and cash flow. In my opinion, if you sell the existing paid off home, pay cash for the new home, and have a ton of left over assets... Then pay cash. On the other hand, cash is king and times are uncertain. When analyzing similar customer circumstances, more often than not we end up advising customers to put 20% down on the new home (therefore avoiding PMI). The balance of the proceeds kept in any sort of interest bearing account will leave you plenty of money to safely make future mortgage payments, yet safely and securely leave you with plenty of "cash" for the unknown future. Plus, you can always simply pay the loan off later.
Thanks. Good answer. There is not enough information on what is going to happen in the future. If we could predict that, we would all be better off in a number of ways. Income, cash flow are not problems for me. Income from cash and obtaining a mortgage will not give me enough interest, along with other deductions, to overcome the standard tax deduction. So guess I will use cash to leverage a price of a new home. I will probably be better off. And I do like simple with the least amount of paperwork. So unless something else changes, I think I will pay cash. Thanks for all the responses!by JoeMetzlerBest AnswerYou questions doesn't really give anyone here enough information to make a great response. Not only should you consider interest rate, and deductions, but you must also consider income and cash flow. In my opinion, if you sell the existing paid off home, pay cash for the new home, and have a ton of left over assets... Then pay cash. On the other hand, cash is king and times are uncertain. When analyzing similar customer circumstances, more often than not we end up advising customers to put 20% down on the new home (therefore avoiding PMI). The balance of the proceeds kept in any sort of interest bearing account will leave you plenty of money to safely make future mortgage payments, yet safely and securely leave you with plenty of "cash" for the unknown future. Plus, you can always simply pay the loan off later.
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