Buying a Retirement Home With Cash
Maybe you have just sold your home and you are ready to buy your retirement home. Perhaps you are purchasing a second home where you will eventually retire.
Either way, you have enough money to pay for your retirement home in cash. But should you?
Here are few issues to consider:
You will tie up your liquid assets.
Paying cash for a home can tie up a large lump sum in one place (until you sell the property). Will you have enough cash on hand to cover your retirement, emergencies and the monthly and annual expenses for your new home?
Will you want cash to pay for your children’s future expenses, including advanced degrees, weddings or the down payment on their first home? Will any older relatives need help paying for their living costs?
You may be able to get a deal.
Paying in cash can give you the leverage to bargain and move your purchase offer to the front of the line.
Sellers like cash offers because they do not have to worry about you getting approved by a lender for a loan. Since the seller is benefiting from your cash payment, you can ask for items that will benefit you, such as home repairs, a home warranty or seller contributions toward your closing costs.
You do not have to go through the hassle of getting a mortgage.
When you pay in cash, you do not have to endure the sometimes aggravating and time-consuming process of securing a mortgage. A hundred things can arise during the lending process that will lead to you not getting a loan.
You’ll miss out on the financial benefits of a mortgage.
It may not seem like those monthly payments will do you any good. But making timely mortgages can help boost your credit score. If you have used the mortgage interest deduction to reduce your federal income tax bill, you will lose that benefit when you pay cash for your retirement home.
You will not have mortgage payments.
It is difficult to complain about not having to deal with that hefty monthly bill for 15 or 30 years. And if your financial situation changes, you will not have a monthly mortgage payment hanging over your head.
You will own your place.
Owning your home free and clear can be mentally liberating.
Still unsure whether to pay cash or use a mortgage to purchase your retirement home? Contact us to discuss it further.
Do you have questions?
Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at info@esmlaw.com.
