ok its me again,as you all know(well the regs)im in the process of buying a Karsten. would it be better for me to pay the entire balance in cash or take out a loan so i can have a bank behind me just incase something were to go wrong in the future?? i was thinking of taking a loan out because of that reason and also so i can build up credit.i was going to pay off the laon within two years anyway but should i pay it all in cash??
thanks
cash or loan
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rmurray
Re: cash or loan
Banks will not help with warranty issues...all they want is thier money...with interest...
Some cash buyers will hold back about 10% until home is completely delivered and set...but they have to agree not to live in the home until it is paid for...
No dealer would agree to holding money for the long haul to protect you for problems that do not exist..
Some cash buyers will hold back about 10% until home is completely delivered and set...but they have to agree not to live in the home until it is paid for...
No dealer would agree to holding money for the long haul to protect you for problems that do not exist..
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Bill Norcross
Re: cash or loan
If your point about something going wrong in the future was about personal finances and not warranty issues, then having a mortgage is something to consider. Part of the answer will lie in whether you are planning to get a regular land-home mortgage (real estate) or a chattel mortgage (home-only).
But, generally speaking there are more advantages to a mortgage than not. This is why many high-net-worth people keep a mortgage when they have the cash to pay it off. Your money can definitely make more for you than being tied up in equity. If you are facing imminent retirement, have health problems and have a fixed income, maybe having no mortgage payment makes real sense, but even then it's not a slam dunk.
You can use the tax write-offs, if you get them. Another less well-understood issue is if you are in a position where the property will appreciate, mortgage money is virtually interest-free after inflation and tax benefits.
Real estate is appreciating nationwide 4.5% on average, and the government expects this to continue for 20-25 more years, at least! Some hot spots are rising over 7% a year, some areas are languishing at 1-2%.
Inflation is running at 2-4%, so your local appreciation percentage is eroded by your local inflation percentage. This produces a range of return on real-estate equity of 5% best case to -3% worst case, with most areas in between. There are many, many safe investments out there that beat that, both taxable and tax-free.
If you read "Deals on Wheels" by Lonnie Scruggs and see his routine 50-75% returns, and frequent triple-digit returns (without being a landlord), it might make sense to get a mortgage and use your cash to produce some serious cash flow using his tried and true formula. Lonnie says he can't understand why people let the bank make 15-16% on their money, but only pay 2% or so for using it, when people could make 50-100% or more on their own. Good question!
Count your blessings on being able to buy with cash, and consider putting your cash to work for you for a higher return. Best regards. Bill.
But, generally speaking there are more advantages to a mortgage than not. This is why many high-net-worth people keep a mortgage when they have the cash to pay it off. Your money can definitely make more for you than being tied up in equity. If you are facing imminent retirement, have health problems and have a fixed income, maybe having no mortgage payment makes real sense, but even then it's not a slam dunk.
You can use the tax write-offs, if you get them. Another less well-understood issue is if you are in a position where the property will appreciate, mortgage money is virtually interest-free after inflation and tax benefits.
Real estate is appreciating nationwide 4.5% on average, and the government expects this to continue for 20-25 more years, at least! Some hot spots are rising over 7% a year, some areas are languishing at 1-2%.
Inflation is running at 2-4%, so your local appreciation percentage is eroded by your local inflation percentage. This produces a range of return on real-estate equity of 5% best case to -3% worst case, with most areas in between. There are many, many safe investments out there that beat that, both taxable and tax-free.
If you read "Deals on Wheels" by Lonnie Scruggs and see his routine 50-75% returns, and frequent triple-digit returns (without being a landlord), it might make sense to get a mortgage and use your cash to produce some serious cash flow using his tried and true formula. Lonnie says he can't understand why people let the bank make 15-16% on their money, but only pay 2% or so for using it, when people could make 50-100% or more on their own. Good question!
Count your blessings on being able to buy with cash, and consider putting your cash to work for you for a higher return. Best regards. Bill.
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