Buying a house with cash
Question: I’ve recently inherited over $800,000, and I’m interested in buying a : house. I’ve got no credit. Not bad credit, just no credit. Would it : be more prudent to by the house with a loan or pay cash? My opinion is that if you have all this money available to you, why would you want to take out a mortgage and be faced with all the interest payments? If you want to get involved in other investments as well as buying a house, then it would make sense.
Answer: First of all, building credit will be no problem for you, unless you squander your inheritance.
Many will disagree with me, but in my opinion, you face a more difficult problem. When you announce that you have a big chunk of money, there will be a whole spectrum of people, from outright swindlers, to legitimate investments, that want to get some of that money. This includes:
– “I have the perfect investment for you” – “Yes, you should borrow money, in fact, I’ll arrange it” – “My son needs an operation” – “Starving children in Africa” – “This house is a steal”
Assuming I was planning to stay in the area for a while, I would absolutely buy a house with cash. No loan contingency — I might even get a better price. And I would still try to shop around a lot, and negotiate a good price. And I wouldn’t spend the whole wad on one place. Maybe only a quarter or third of it.
Look for friends and relatives that have been successful for a long time (usually older people) to advise you. Seek out those whom you have trusted for a long time, long before you received your inheritance. In the meantime, I’d keep your funds split up among insured CD’s at several different banks. Don’t make any sudden moves with it. Thanks for the reply Grace! It seemed to make sense to me to buy it with cash too. But another gentleman suggested the following scenario:
Let’s say I buy a house for $100,000, and I’m able to resell it three years later for $130,000.
If I pay cash for the house, all my money is tied up in the investment.
But if I put $10,000 down, I’ll still make the $30,000 profit in three years, but in the meantime, the rest of that cash is available for other investments.
I guess that it depends on if I’m buying for an investment or for a place to retire to.
Well thanks for taking the time to reply, Grace!
Related Posts
Filed under: Bad Credit
Leave a Comment
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
TrackBack URL | RSS feed for comments on this post.