Cash vs financing when buying your St. Louis, Missouri home |Is cash a better option when writing an offer on your new home?
Should You Pay Cash or Finance Your New St. Louis Home?
Cash is king, right? Yes and no! Investors often think that simply by offering to buy in cash, they can offer a significantly lower offer, but this is not always true. While some sellers will discount their St. Louis home for a quick, cash offer, that’s not universally true. So if you can pay cash, how do you know if you should?
The primary reason for financing a St. Louis home purchase is that a home mortgage interest is still one of the best tax benefits available. While this is not intended to be tax advice, a quick check with your tax professional can help you understand how you can reduce your taxable income by having a mortgage. Typically, you will be able to deduct the interest and property taxes and thus reduce your taxable income and reducing the amount of income tax.
Another benefit of financing is purchasing power. Most people can finance a more expensive home than they can pay for in cash. You also find that financing a home allows you to diversify your investments. Rather than having the bulk of your assets in the property, you can also invest is stocks, bonds, gold and other opportunities. If the last 10 years have shown us anything, it’s that it is wise to have your apples in a number of baskets.
So when is cash a good idea?
Certainly if you are concerned with your credit, paying cash might be your best option. Foreign buyers who do not have established US credit might also need to pay cash. Self-employed buyers might also need to use cash or a large down payment if they are unable or unwilling to document their income.
There are also some properties where the St. Louis home owner will negotiate a lower price for a quick sale. Fixers also are good candidates for a cash offer where the home might not be in good enough condition to obtain a home loan. Many lenders will not lend money on a true fixer or unlivable property, even if the intention is to fix it up.
Deciding to finance a St. Louis home purchase or pay cash is based on your personal situation. It’s best to talk with your tax professional and lender about your options.
Cash vs financing when buying your St. Louis, Missouri home |Is cash a better option when writing an offer on your new home?