Mortgage or Cash? How Should You Pay a House?

James Henry Abrina By James Henry Abrina, 2nd Sep 2010 | Follow this author | RSS Feed | Short URL http://nut.bz/4sbdxgpz/
Posted in Wikinut>Money>Mortgages

How to own a house is an issue, but the mode of payment can be a bigger concern. One wrong move, and you are all set to live a life of a broke. Here are some pointers to consider on your payment scheme.

Mortgage or Cash?

You may be wondering what is more practical in buying a house? Will you pay the total price once and for all or should you find a lending institution to help you out with the payment scheme like availing a mortgage loan? In a time of economic hardship and shattering from the last financial turmoil across the nation, wise decision making is an imperative towards a successful personal financial planning. This is especially true in a time when even those supposedly assisting you with your money problems are seeking bails from the federal government just to get by the daily operation. What are the things to consider in choosing your plan? Or how will you know if you do not have a choice at all?

Many states drastically failed in the housing market in the last three years either due to left-out mortgage contracts or unsold housing contracts. The past recession proved fatal enough to the housing sector which came to a halt both in collection and distribution of unused properties. Although there are some states that emerged as winners in spite of the problems, the general statistics still shows bad results. If you are living in states that offer very low amortization and interest rates just to keep the housing market going, then you are lucky because paying in cash may not be a problem. As a matter of fact, some financial sectors are encouraging people to pay in cash if possible to boost the circulation of liquidity a bit. Many properties that are originally amounting to seven digits upon appraisal are currently sold in almost half being cut off. As a rule of thumb in every business, it is better to have even only the initial investment than not have anything at all.

Likewise, cashing out may even give you huge discounts or rebate. But you may consider cashing out again if you are already enrolled in a mortgage contract. Some lenders are protecting their income from interest rates should the lendees pay their total dues in no time. Instead of having rebates, you will incur penalties for the service they gave you and for not finishing the contract. So if you are expecting huge cash and do not have a scheduled expenses to begin within, better to transact with the real estate directly than through a third party.

On the other hand, mortgage can be a great help especially for those who cannot collect a huge amount required by the real estate as your down payment. Although lenders also require down payment as a security, the term is much lower than in real estate deals. Overall, mortgage is widely used than cash in buying homes. If you are confident with your career, better ask your provider now for details.

Tags

Bank, Cash, Debt, Finance, Housing Loan, Loan, Money, Mortgage

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author avatar James Henry Abrina
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Comments

author avatar Rose*
22nd Nov 2013 (#)

If you have the cash, then buy with cash (interest rates on savings are lower than the interest on a mortgage, so it's not worth taking out debt if you can pay with cash).

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