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If you could pay all cash for a home right now, would you....even if it left you cash poor? Or would you pay mostly cash and get a small mortgage (and refinance later)? House needs a bit of work, but could always get a HELOC or something of the sort after purchase. Thoughts? Would love to avoid all those mortgage fees and crazy interest rates, but it is always good to keep cash on hand, right?
Last edited by alsier2004; 08-26-2023 at 09:24 PM..
If you could pay all cash for a home right now, would you....even if it left you cash poor? Or would you pay mostly cash and get a small mortgage (and refinance later)? House needs a bit of work, but could always get a HELOC or something of the sort after purchase. Thoughts? Would love to avoid all those mortgage fees and crazy interest rates, but it is always good to keep cash on hand, right?
Good question. Here is what I suggest. Assuming that you would have "a little" cash left over after buying the house for cash, then that is what I suggest that you do. You'll save thousands of dollars in loan fees.
Then, once you get the house (free of any mortgage), apply for a HELOC loan. The loan processing fees are VERY low for HELOC loans... perhaps only a few hundred dollars. That will give you access to money that you may need for repairs and improvements as you need it. And you don't pay interest on the money until you actually draw it out of the account. Plus, the repayment terms are VERY flexible.
Good question. Here is what I suggest. Assuming that you would have "a little" cash left over after buying the house for cash, then that is what I suggest that you do. You'll save thousands of dollars in loan fees.
Then, once you get the house (free of any mortgage), apply for a HELOC loan. The loan processing fees are VERY low for HELOC loans... perhaps only a few hundred dollars. That will give you access to money that you may need for repairs and improvements as you need it. And you don't pay interest on the money until you actually draw it out of the account. Plus, the repayment terms are VERY flexible.
Great advice, thanks! Is there a waiting period after a home purchase to apply for a HELOC?
Great advice, thanks! Is there a waiting period after a home purchase to apply for a HELOC?
Not that I'm aware of. As long as you own the home, have substantial equity in it, and have good credit, the lenders are eager for your business. That should be especially true now that the real estate mortgage business has slowed WAY DOWN in the past 8 months. Shop around for best rates.
If you could pay all cash for a home right now, would you....even if it left you cash poor? Or would you pay mostly cash and get a small mortgage (and refinance later)? House needs a bit of work, but could always get a HELOC or something of the sort after purchase. Thoughts? Would love to avoid all those mortgage fees and crazy interest rates, but it is always good to keep cash on hand, right?
Depends on your ownership timeline.
Going to own it then dump it in 3 years? Get a loan.
Going to live in it long term (10+ years) then go ahead to dump the cash. Since you'll be "cash poor" after the purchase, you'll be re-loading your bank balance with income, at a more rapid rate, since you won't have the payment every month. (Not paying rent/mort, sure makes cash pile-up quick!) Use this cash for improvements and going out to dinner, often. I'd hold off, on any HELOC, unless you are in dire need.
I don't see interest rates coming back down for a loooooong while. (Think 20+ years, if that.)
First, they gotta quit going up.
Then, they gotta stabilize, and this may take 4-5 years.
Unless, of course, Pfizer puts out another COVID variant that kills lots of people, then all bets are off.....
(Beware, Pfizer stock is down, 28% since Jan. 01, so they gotta do something...) to get that number back up.) Got those shareholders, ya know....
My take: well maybe this is just what I did. I put all cash down on my house and I bought an older home that wasn't in the best shape and had a lot of things hidden the inspector couldn't see. I knew house needed some repairs but it was a bit more than I thought .
I didn't want a mortgage so went for broke and cash paid. Haven't been here more than one year but had to do some necessary repairs and desired updates which meant more cash. I still didn't want to take out any kind of loan. So now bank account is a lot less and more and more things come up every day which needs money; so I still am paying out but watching my balances a bit more closely and finally saying some things can wait until I bring up my assets again. Everything is a lot more expensive now. No regrets in paying cash. No monthly expenses except utilities and other household stuff.
Not having a mortgage is huge for me; maybe not for others. But for me it is what I wanted. Didn't want to have to do a mortgage ever again. For the OP though; you have to do what is right for you. Mortgage, loan after purchase, or cash payment: only you know what you can do and only you know what you are willing to do. You have to do what is right for you. Now I am just thinking about future upgrades and plans and when is the right time. I just don't like any kinds of loans so if I can't afford it; I'll wait until I can. Good luck with your choice.
Good question. Here is what I suggest. Assuming that you would have "a little" cash left over after buying the house for cash, then that is what I suggest that you do. You'll save thousands of dollars in loan fees.
Then, once you get the house (free of any mortgage), apply for a HELOC loan. The loan processing fees are VERY low for HELOC loans... perhaps only a few hundred dollars. That will give you access to money that you may need for repairs and improvements as you need it. And you don't pay interest on the money until you actually draw it out of the account. Plus, the repayment terms are VERY flexible.
+1 ^^^^ This is what I would do as well and for those reasons.
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You have to do what is right for YOU!
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