Mortgage financing VS just paying cash

Whether you have been scrimping and saving or you recently inherited money, you might be considering paying cash to purchase a home. While it may sound like a great idea to sink whatever cash you have available into purchasing a primary home or a vacation home, there are plenty of reasons to consider saving your cash and financing your mortgage.

Why financing makes sense

There are some common sense reasons for financing your home mortgage versus paying cash outright. In addition to tax breaks you are allowed for mortgage interest, you have the opportunity to invest your cash in investments that can provide a nest egg for later. Here are some other things to consider:

• Record low interest rates – Core Mortgage Financial is uniquely positioned to help you take advantage of record low interest rates. Today’s rates are extremely low and since you can deduct interest on your taxes in most cases, it’s a good idea to capitalize on these low rates.
• Interest only loans – When you elect to put down a large amount of money, you can also take advantage of interest only loans that allow you a great deal of flexibility. For example, you can make bulk payments to pay down your principal balances at nearly any time. Interest only payments also act in a manner similar to fixed rate mortgages, you always know what your monthly payment will be.
• Rainy day funds – Let’s face it, emergencies happen. If you sink all of your savings into a home, you may be forced to consider a cash-out refinance. Refinancing almost always involves a higher Naples mortgage rate than a purchase. However, if you keep a cash buffer and later find out that you don’t really need it, you can elect to pay down your mortgage.

There are many benefits to having a home mortgage beginning with tax write-offs that can help reduce your taxable income. When you can afford to make a large down-payment you’re also mitigating the additional expense of private mortgage insurance. Generally, borrowers who have the ability to make a large down payment pay less in overall interest rates and can get better rates on insurance as well. Before you decide to pay cash, consider all of your options. If you are uncertain, contact Core Mortgage Financial and let us help you evaluate your options. Whether you are considering buying a primary residence or a second home, Naples mortgage rates are currently very low. We can help you make the best decision based on your overall financial condition.