More than ever, many people are in the enviable position of being able to pay cash for a home. Paying cash for a home can substantially improve your negotiating position, as you can close much faster than a person who needs to obtain financing. Cash purchases can be closed in a matter of days if both parties are willing and there are no problems with title. You are also poised to get “deals” on fixers, since you will not have to worry about passing a bank appraisal.
But Survey the Whole Kingdom
One of the benefits of home ownership is the ability to deduct your interest payments on your tax return. If you need this deduction, you might do better to finance the home and invest your cash. Also, you may feel that you can get a higher return by investing the cash than you will have to pay in financing a home mortgage. Or you may wish to divide your home's purchase price into several individual down payments - something worthy of the property investor's attention.
Your decision should be based on a clear picture of your finances, as well as your level of risk aversion. Definitely discuss your options with your accountant before reaching a conclusion.
