Saving to Buy a House in Cash?

[formercalifornian]

We made several offers before we finally bought a house. For one, cash was a significant bargaining chip, but for another, it was essentially meaningless.

[Dbatiste]

Originally Posted by TouchOfWhimsy

Thanks for all of the responses!

I should have told more of the story: We owned a house in 2002, sold it in 2004, and moved from CT to FL. We rented in FL for a year, then bought a small house down there. We planned to stay, but DH's company closed, the house prices fell, he got another position back in Connecticut, and long story short, we ended up doing a short sale on the house. It was a terrible, stressful time. Now we are at the point where we are caught up on all of the bills, and we never want to have to worry about losing our home again. We are in our early 30s, and have two children. If in three years we're not prepared to buy another small house in cash, then we'll try to get a 15 year loan and pay it off as quickly as possible.

Thank you for all of the viewpoints on this!

With the your update in mind. I would pay cash for the house. Chances are the short sale damaged your credit.

I personally, would rather have a house paid in full with no mortgage. Sure the interest rates are low, but you will have a 15 or 30 year mortgage. With this economy there is not telling what could happen to you or your jobs.

Also, I may be a little biased on this topic because I am looking to buy a house next year.....cash deal.

[darstar]

I sold my last house on Ebay...for cash. Yes I took a "discount" , but it was a fast clean deal. No agents fees , etc. The title company handled the whole deal for a few hundred bucks.
had I waited to get the top dollar ( this was 2 years ago ) , with the declining market values , I would have realized even less....This was not a substandard property ether. 500,000 value inland lake home.

[golfgod]

chet everett wrote; BOTH the quick close and lack of inspection DO MERIT SIGNIFICANT PRICE CONCESSION from the seller WHILE ALL CASH BY ITSELF DOES NOT!

I agree with that, up to a point. To a seller that has had offers fall through because at the last minute the loan underwriter got a cramp it is significant. I have bought more than a few (probably about a dozen to 15) that would NOT have passed a LENDER'S inspection, generally because of a roof.

When a buyer with a carppy house, who has already heard from the RE agent that he's going to have to put some money (that he likely doesn't have) into a house to even make it marketable, here's ALL CASH, he is often very motivated.

I realize that I'm not the typical buyer, I've owned about 100+/- houses and have seller financed (for down payments as low as $1500) about 40 deals. I've gotten a few of those back, but have always increased my profit on the turnaround.

Again, YMMV.

golfgod

[lumbollo]

Originally Posted by Dbatiste

...Chances are the short sale damaged your credit......

Oh yeah. Short sale of property and you are going to take a big hit.

I don't have a mortgage on my home though I didn't buy it with cash. I did however pay it off in less than 10 years. I would not have it any other way as not having to write a mortgage payment each month is simply a huge freedom. When I did this you would not believe the advice that I got that it was a bad idea to pay off this place. Stuff like, "Oh take the money and invest it in the stock market instead". When the market was collapsing earlier this year I had not one worry about it as I had a paid for house.

People who tell you to keep a big mortgage fall into one of two camps:

1. They are trying to sell you some credit or they are making money off your decision to take on debt.
2. They have never experienced debt free living. Misery loves company and telling others to make the same mistakes is comforting.

So I say if you want to save up for a house then it's a good plan.

[darstar]

Home mortages are not so common in other Countries.... What IS common for a large part of the world , is saving up , to buy a home. Faimly is another source. Low interest loan , 10 year max and the like are common. All this without mortages and all the extra costs. If you can help out your kids , or your Sister , its a good thing., for everybody.

[debtmonger]

I would much rather be investing a house payment in good mutual funds than having to ship it to a bank each month to cover a house payment. If someone has to borrow to get into a house, that's fine, but I would pay it off as soon as possible, regardless of the interest rate. Any real estate beyond the primary residence, should be purchased with cash.

[chet everett]

Originally Posted by darstar

Home mortages are not so common in other Countries.... What IS common for a large part of the world , is saving up , to buy a home. Faimly is another source. Low interest loan , 10 year max and the like are common. All this without mortages and all the extra costs. If you can help out your kids , or your Sister , its a good thing., for everybody.

Dismal.com - Deconstructing Homeownership

My reading of the stats form places with VERY different levels of home ownership (like Spain & Switzerland) is that in areas where land is cheap yet that is the ONLY asset people are likely to have then homeownership is overly important. In someplace like Switzerland, where land is VERY expensive but savings rate is also high, the uses of capital are more broad. Even if you were very well paid in Switzerland it might STILL makes sense to rent as landlords have lots of options...

[GregW]

Check out the thread on Las Vegas houses. 50 grand would go a long way out there.