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Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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jhowie
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ques

Post by jhowie » Thu May 10, 2018 8:00 pm

/dev/null
Last edited by jhowie on Fri May 18, 2018 7:27 am, edited 2 times in total.

runner540
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Re: Should I pay cash for a house?

Post by runner540 » Thu May 10, 2018 10:34 pm

Go for it! (as long as you are not taking money out of tax advantaged retirement accounts to do it) Are you in TX with those property taxes? I am planning to do the same in a few years. Some will say you could come out a little ahead mathematically with leverage. But, you'll feel great being debt free, and you'll be able to plow most of your income into investments. Make sure you get title insurance (mortgage lender would require this, but you need to make sure to get it on your own), home insurance and save for property taxes.

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Watty
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Re: Should I pay cash for a house?

Post by Watty » Thu May 10, 2018 10:54 pm

runner540 wrote:
Thu May 10, 2018 10:34 pm
Go for it! (as long as you are not taking money out of tax advantaged retirement accounts to do it)
And maxing out all your tax advantages accounts too.

Other than that paying cash makes sense to me.

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weltschmerz
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Re: Should I pay cash for a house?

Post by weltschmerz » Thu May 10, 2018 11:00 pm

I love the idea of paying cash, but it's currently a huge % of your net worth. I'm sure there's a rule of thumb for this, maybe no more than 33% of your net worth would be prudent, in keeping with the teachings of the Talmud. However, if you have a stable income, and will be re-accumulating a nice nest egg in short order, then I could see paying cash. I like the simplicity of it. With no lender contingencies, your deal will close sooner too.

gotester2000
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Re: Should I pay cash for a house?

Post by gotester2000 » Fri May 11, 2018 12:30 am

You can pay cash for the house - you have a good stable job and doing great at your age and the house budget is reasonable, so no reason to have the lender monkey on your back.

Hazel-Rah
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Re: Should I pay cash for a house?

Post by Hazel-Rah » Fri May 11, 2018 1:27 am

I wouldn't do it.

You don't need two extra rooms. You're single. Keep saving. Stay renting where you are. Paint your walls so it feels newer.

Is "savings" liquid in a bank or are you pulling it out of a mutual fund and expect to pay a bigger tax bill because of it?

You would be better off investing that $667/month that you would be saving in taxes. It maintains your liquidity for when you might need it. There is no reason to tie up most of your money in a house.

anoop
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Re: Should I pay cash for a house?

Post by anoop » Fri May 11, 2018 1:47 am

Go for it.

mortfree
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Re: Should I pay cash for a house?

Post by mortfree » Fri May 11, 2018 2:42 am

1.5 baths?

If you plan to stay single, ok.

If not then this may not be the house for you.

At 30 I would not pay cash. Probably 50% down and a 15-year mortgage.

grettman
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Re: Should I pay cash for a house?

Post by grettman » Fri May 11, 2018 4:41 am

Pay cash unless you can put that money some where that will have a *guaranteed* rate of return which is greater than the interest rate you would get on the loan.

I am aggressively paying down my mortgage because I want to be free of debt. I would not choose to get into debt so I am giving you the advice I would do myself.

NextMil
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Re: Should I pay cash for a house?

Post by NextMil » Fri May 11, 2018 4:48 am

Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.

student
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Re: Should I pay cash for a house?

Post by student » Fri May 11, 2018 5:40 am

Personally I would also pay cash in your situation.

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jfn111
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Re: Should I pay cash for a house?

Post by jfn111 » Fri May 11, 2018 5:53 am

NextMil wrote:
Fri May 11, 2018 4:48 am
Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.
Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV

NextMil
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Re: Should I pay cash for a house?

Post by NextMil » Fri May 11, 2018 10:10 am

jfn111 wrote:
Fri May 11, 2018 5:53 am
NextMil wrote:
Fri May 11, 2018 4:48 am
Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.
Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV
Yes, exactly every market is different, every seller and every agent is different. With $20k and $40k over asking, are you wondering if your realtor priced it wrong given the market?

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220volt
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Re: Should I pay cash for a house?

Post by 220volt » Fri May 11, 2018 11:05 am

20% down on a 15/year mortgage. Pay a little bit extra and you're done in 10. Invest the rest. Any questions?
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

gliderpilot567
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Re: Should I pay cash for a house?

Post by gliderpilot567 » Fri May 11, 2018 12:33 pm

The "pay cash" question is different from "should I buy a house" question. Others have given good inputs on the cash question.

You said you would like to buy a house. Why? What are the objectives? What are the requirements you have, for which you have concluded that "purchase a house" is the appropriate solution? I am not saying that you do not have a compelling reason - just hope you have put some thought to this. Especially since you are considering buying a starter house... be prepared to take a bath if you sell in a few years, because (at least in my area) starter houses are a dime a dozen, they don't appreciate much, they only fit the requirements for a small niche of buyers, and they are always building more, newer ones.

I bought my first house at age 27 and single. It was a 3BR/2BA starter house, $185k. Why did I buy it? I don't know. It was just the thing I thought I was supposed to do, and I "wanted a house" even though 2 of my 3 rooms and most of my common space sat unused most of the time. Meanwhile I felt compelled to furnish the open space, and paid utilities to cool, heat, and light all that space. After I got married, we lived in that house for 1 week then moved out of state for work and never lived in it again. I finally unloaded it 8 years, after having lived in three other, different, larger family homes, and essentially broke even on the sale after commissions were paid.

Good luck and congrats on your good savings position! My best wishes for you, that you find a housing solution that adequately and affordably meets your needs.

JoeRetire
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Re: Should I pay cash for a house?

Post by JoeRetire » Fri May 11, 2018 12:46 pm

jhowie wrote:
Thu May 10, 2018 8:00 pm
I have $300k in savings with zero debt.
Are you so risk-averse that all of the $300k is in cash?
Or, if it's invested, what kind of return are you getting?
I'd like to purchase my first home and am looking at a modern 3 bed, 1.5 bath for $240k.
How long would you expect to live in this home?
Pay cash and be done with it? Interested in your opinions.
If you are considering this for peace-of-mind or other non-financial reasons, then do whatever lets you sleep at night.
But if you are considering this for financial reasons, then you need to compare your potential mortgage rate to your investment returns.

My 30-year mortgage is at 3.875%. I consider that cheap money. And I don't lost sleep over it.

Olemiss540
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Re: Should I pay cash for a house?

Post by Olemiss540 » Fri May 11, 2018 12:49 pm

Why do you have 300k in cash? How much do you have in retirement?

These are important questions as it allows others to determine the alternative options if you don't pay full cash.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

GoldenGoose
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Re: Should I pay cash for a house?

Post by GoldenGoose » Fri May 11, 2018 12:51 pm

I would. I love to own things out right and the peace of mind.

Ruger
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Re: Should I pay cash for a house?

Post by Ruger » Fri May 11, 2018 12:56 pm

mortfree wrote:
Fri May 11, 2018 2:42 am
1.5 baths?

If you plan to stay single, ok.

If not then this may not be the house for you.

Although this is off the OP question, I agree with it. 1 1/2 bath houses are not as desirable as at least 2 full baths.
I wouldn't purchase anything less than 2.

Goal33
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Re: Should I pay cash for a house?

Post by Goal33 » Fri May 11, 2018 12:58 pm

I would go for it but definitely get one with a full 2nd bathroom just to make this better time-proofed... you'll likely end up moving anyway but just in case life works out and you can stay, you won't want to have that be an issue.
A man with one watch always knows what time it is; a man with two watches is never sure.

JoeRetire
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Re: Should I pay cash for a house?

Post by JoeRetire » Fri May 11, 2018 1:00 pm

GoldenGoose wrote:
Fri May 11, 2018 12:51 pm
I would. I love to own things out right and the peace of mind.
Me too. But I also like having some of my money invested in the market.

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ReformedSpender
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Re: Should I pay cash for a house?

Post by ReformedSpender » Fri May 11, 2018 1:01 pm

220volt wrote:
Fri May 11, 2018 11:05 am
20% down on a 15/year mortgage. Pay a little bit extra and you're done in 10. Invest the rest. Any questions?
Bingo!

Interest rates are still near historic lows. It doesn't make a whole lot of sense to pay cash for a home, where possible, when you could continue growing your net worth with a substantial portion of your remaining savings.

:beer
Last edited by ReformedSpender on Fri May 11, 2018 1:38 pm, edited 1 time in total.
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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220volt
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Re: Should I pay cash for a house?

Post by 220volt » Fri May 11, 2018 1:05 pm

ReformedSpender wrote:
Fri May 11, 2018 1:01 pm
220volt wrote:
Fri May 11, 2018 11:05 am
20% down on a 15/year mortgage. Pay a little bit extra and you're done in 10. Invest the rest. Any questions?
Bingo!

Interest rates are still near historic lows. It doesn't make a whole lot of sense to pay cash from a home, where possible, when you could continue growing your net worth with a substantial portion of your remaining savings.

:beer
yep, and with 200k invested and growing, you can always pay it off early if you really wanted to.
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

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Sandtrap
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Re: Should I pay cash for a house?

Post by Sandtrap » Fri May 11, 2018 2:27 pm

3 bedroom 2 bath with enclosed garage in a good area of appreciative and curb value.
cash.

nimo956
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Re: Should I pay cash for a house?

Post by nimo956 » Fri May 11, 2018 2:45 pm

I wouldn't spend 85% of your net worth on a house. Put 20% down, set aside an emergency fund plus money for furniture, etc, then invest the rest. You maintain liquidity and always have the option of paying it off if you want.
50% VTI / 50% VXUS

soccerrules
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Re: Should I pay cash for a house?

Post by soccerrules » Fri May 11, 2018 2:48 pm

what is your living situation now ? Rent ? Live at Home ? Have roommate ?
How much in 401K ?

By buying the house you are tying up $240K in your house , paying a rising $667/mo in prop taxes, increase utilities (i assume), increased insurance costs, maintenance and repairs, furnishings etc. Your cost of living will go up depending on your current payment for housing.

Sometimes these decisions are defined as Good, Better and Best.

Think long and hard about why you want to buy a house. You could argue that staying put and continuing to save save save- could be the BEST decision.

if you are set on buying a/this house-- cash is Better if not the Best decision for you. I also like the 50% down 10 or 15 year mortgage and then decide later if you want to accelerate payment.

Best of luck
Don't let your outflow exceed your income or your upkeep will be your downfall.

jminv
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Re: Should I pay cash for a house?

Post by jminv » Fri May 11, 2018 2:56 pm

No, you shouldn't put the vast majority of your net worth into a house. That would be an extremely concentrated investment. You would not be diversified which is what you should be.

It sounds like you have all your savings in cash in which case you're very risk averse and you've missed out on a great bull market run. If it was instead a question of 'should I keep all my money in cash or put it in a house' then I would go for the house since there would be some potential to at least protect your wealth from inflation. Note that by paying all cash you won't be able to benefit from the leverage effect which, to me, is the most attractive element of property as an investment outside having to live somewhere anyway.

pennylane
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Re: Should I pay cash for a house?

Post by pennylane » Fri May 11, 2018 2:58 pm

Yes pay cash.

You can negotiate MUCH better terms than you've listed.

Its a guaranteed 4-5% return on your money plus appreciation of the home.

Why would you mortgage the home to at best get 7-10% average or risk taking a 40% hit?

Get the guaranteed 4-5% + the appreciation, DCA back into an index fund as you aggressively save.

you lose your job and the market (stock and housing) takes a hit, you're ok.

If you mortgage your home and loose your job + the market takes a hit, you're at risk of withdrawing your money while its down and losing your home.

Good luck! The answer is very clear to me.

killjoy2012
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Re: Should I pay cash for a house?

Post by killjoy2012 » Fri May 11, 2018 3:26 pm

Yes, pay cash, so long as you're not pulling money out of tax sheltered accounts to do so. People commenting that this is too much concentration are likely not factoring in your age IMO, and that many 30 year olds typically have negative net worth. I also wouldn't sweat the "only 1.5 bath" comments, as I'm assuming people are inferring you may get married and have kids, and even if that does happen, which it may or may not, guess what - she's not going to want to live in your existing house anyway (regardless of how big/nice/etc. it is).

I bought my 3BR 1.5 bath house as a single guy in 1999, and guess what - I'm still single and still here. And I wouldn't want a larger house due to all of the extra maintenance and ops cost.
Last edited by killjoy2012 on Fri May 11, 2018 3:28 pm, edited 1 time in total.

Bungo
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Re: Should I pay cash for a house?

Post by Bungo » Fri May 11, 2018 3:28 pm

+1 in favor of paying cash. I don't see any reason to bother with a mortgage. If you decide you want one later, you can always get one. Be sure to take advantage of the strong position you will be in as the buyer: unless you're in a market where paying cash is the norm, you should be in a good position to negotiate aggressively with the seller to reduce the price, get him to pay all the closing costs, etc.

Bungo
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Re: Should I pay cash for a house?

Post by Bungo » Fri May 11, 2018 3:29 pm

killjoy2012 wrote:
Fri May 11, 2018 3:26 pm
Yes, pay cash, so long as you're not pulling money out of tax sheltered accounts to do so. People commenting that this is too much concentration are likely not factoring in your age IMO, and that many 30 year olds typically have negative net worth. I also wouldn't sweat the "only 1.5 bath" comments, as I'm assuming people are inferring you may get married and have kids, and even if that does happen, which it may or many not, guess what - she's not going to want to live in your existing house anyway (regardless of how big/nice/etc. it is).
I agree with this, and as for the comment that 1.5 bath will make the house less desirable, that should already be reflected in the price (make sure it is, by comparing with similar properties).

soccerrules
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Re: Should I pay cash for a house?

Post by soccerrules » Fri May 11, 2018 3:38 pm

Bungo wrote:
Fri May 11, 2018 3:28 pm
Be sure to take advantage of the strong position you will be in as the buyer: unless you're in a market where paying cash is the norm, you should be in a good position to negotiate aggressively with the seller to reduce the price, get him to pay all the closing costs, etc.
I think YMMV.
In our area houses are selling in days with 5-8 offers over asking price. I don't see that a cash offer has the leverage that some think it might.
I am not hearing that home buyers aren't qualifying for loans. Funding at closing is funding for the seller. (cash or not)
I guess it doesn't hurt to try :beer
Don't let your outflow exceed your income or your upkeep will be your downfall.

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jfn111
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Re: Should I pay cash for a house?

Post by jfn111 » Fri May 11, 2018 4:24 pm

NextMil wrote:
Fri May 11, 2018 10:10 am
jfn111 wrote:
Fri May 11, 2018 5:53 am
NextMil wrote:
Fri May 11, 2018 4:48 am
Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.
Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV
Yes, exactly every market is different, every seller and every agent is different. With $20k and $40k over asking, are you wondering if your realtor priced it wrong given the market?
Nope, we priced the houses to appraise. The markets just nuts right now and people are willing to pay more knowing they will have to use cash to overcome a lower appraisal.

NextMil
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Re: Should I pay cash for a house?

Post by NextMil » Fri May 11, 2018 5:13 pm

jfn111 wrote:
Fri May 11, 2018 4:24 pm
NextMil wrote:
Fri May 11, 2018 10:10 am
jfn111 wrote:
Fri May 11, 2018 5:53 am
NextMil wrote:
Fri May 11, 2018 4:48 am
Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.
Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV
Yes, exactly every market is different, every seller and every agent is different. With $20k and $40k over asking, are you wondering if your realtor priced it wrong given the market?
Nope, we priced the houses to appraise. The markets just nuts right now and people are willing to pay more knowing they will have to use cash to overcome a lower appraisal.
How do you know that $40k was the ceiling? Seems arbitrary. How do you know you didn’t leave another $20 or $40k on the table, especially if it’s so nuts right now, that no seller would consider closing costs under any circumstances?

-buzz-
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Re: Should I pay cash for a house?

Post by -buzz- » Fri May 11, 2018 5:20 pm

The most conservative approach is to pay cash. You would still have a reasonable emergency fund available and the ability to save without having a mortgage payment. There is a lot to like about that approach.

If it were me, I would not love giving up that much liquidity in your situation. I'd probably take out a small mortgage with a very comfortable payment.

With an net income of $5k per month, a payment of $1,250 (25% of income) for mortgage and taxes should be comfortable. You could get a mortgage of $80k on a 15 year term and still fit in that payment amount, including taxes. (Insurance would be on top of that.) You would be putting down about $155k and financing $80k.

This would leave you $145k. I'd set $30k aside (6 months net income) as my cash emergency fund and invest the remaining $115k.

Except for a couple of critical things (fridge, washer/dryer), most of the furniture, appliances, tools, etc. can be cash-flowed as needed from future income. You'll save money on all of that if you take the time to find deals.

Over the next few years, you can take steps to pay down the principal and add to the investment account. It isn't unreasonable to think you could pay it off from cash flow over 5-7 years without dipping into taxable investments. It depends on how you want to skew your principal reductions vs adding to investments.

One other piece of advice. Don't just look at this purchase as the place you will live. Carefully consider the attractiveness of this property for future resale. Think about buying a property that would appeal to the largest number of potential buyers. 2+ bathrooms, good location, neighborhood features, school zones, etc.

As a 30 year old single person, your life might change a lot over the next 10 years. You might get married, have children, adopt a wayward goldfish, who knows? Life changes could put you in a position of selling the house earlier than you might expect. Buy one that will be easy to sell when the time comes.
Last edited by -buzz- on Fri May 11, 2018 5:55 pm, edited 1 time in total.

Jags4186
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Re: Should I pay cash for a house?

Post by Jags4186 » Fri May 11, 2018 5:42 pm

Is 1.5ba really a deal breaker? I guess it depends on the community you live in. Where we are most homes are pre 1950 and the only homes with more than 1.5ba are ones that have had additions.

killjoy2012
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Re: Should I pay cash for a house?

Post by killjoy2012 » Fri May 11, 2018 5:56 pm

Jags4186 wrote:
Fri May 11, 2018 5:42 pm
Is 1.5ba really a deal breaker? I guess it depends on the community you live in. Where we are most homes are pre 1950 and the only homes with more than 1.5ba are ones that have had additions.
Exactly. And the newer homes that are 2-5 bath are 2-7k sq foot homes, which the OP as a single person who didn't mention anything about imminent marriage/kids, likely has no real use for. How many toilets or showers does one guy need? And more rooms == more cleaning, more heating, more AC, etc. Not to mention bigger = costlier.

Bungo
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Re: Should I pay cash for a house?

Post by Bungo » Fri May 11, 2018 5:59 pm

soccerrules wrote:
Fri May 11, 2018 3:38 pm
Bungo wrote:
Fri May 11, 2018 3:28 pm
Be sure to take advantage of the strong position you will be in as the buyer: unless you're in a market where paying cash is the norm, you should be in a good position to negotiate aggressively with the seller to reduce the price, get him to pay all the closing costs, etc.
I think YMMV.
In our area houses are selling in days with 5-8 offers over asking price. I don't see that a cash offer has the leverage that some think it might.
I am not hearing that home buyers aren't qualifying for loans. Funding at closing is funding for the seller. (cash or not)
I guess it doesn't hurt to try :beer
Sure, that's how it is here too (Bay Area), but the all-cash bids are often the ones that win, even if they aren't the highest bids. I assumed from the house price ($240k) that the OP is not in a bubbly area, so an all-cash bid would probably be atypical and therefore advantageous in terms of leverage. I could be wrong, though. Best to check with local real estate agents to understand the market.

LarryAllen
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Re: Should I pay cash for a house?

Post by LarryAllen » Fri May 11, 2018 6:03 pm

I'd buy it and get a roommate. I did that for several years until I met Miss Perfect. Was awesome.

Also, consider this your first rental house so look at it 10 years from now. Will it rent well? Check zillow and rentometer to see what rents are like. Sure you may hate the idea but keep your options open.

Lastly, I like the idea of a little mortgage so you get used to paying it. I would do 25% down on a 15-20 year mortgage.

Edit: I forgot to say that doing the all cash offer is great. Maybe low ball a few houses with all cash and once you get one then buy that one. Don't fall in love with a pile of wood and bricks and dirt. Can always re-fi later.

aristotelian
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Re: Should I pay cash for a house?

Post by aristotelian » Fri May 11, 2018 6:32 pm

The odds are close to 100% that investing stocks will beat the interest rate on a mortgage over 15-30 years. For a 30 year old, I would take the mortgage...but you can't really go wrong either way. You could split the difference and take out a mortgage for $150K or so.

Dottie57
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Re: Should I pay cash for a house?

Post by Dottie57 » Fri May 11, 2018 7:24 pm

aristotelian wrote:
Fri May 11, 2018 6:32 pm
The odds are close to 100% that investing stocks will beat the interest rate on a mortgage over 15-30 years. For a 30 year old, I would take the mortgage...but you can't really go wrong either way. You could split the difference and take out a mortgage for $150K or so.
+1.

Homer
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Re: Should I pay cash for a house?

Post by Homer » Fri May 11, 2018 8:02 pm

Are the posters suggesting he invest the money instead of paying cash for the house, currently borrowing money against the equity in their house to put it into the stock market?
Last edited by Homer on Fri May 11, 2018 8:15 pm, edited 1 time in total.

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jfn111
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Re: Should I pay cash for a house?

Post by jfn111 » Fri May 11, 2018 8:14 pm

NextMil wrote:
Fri May 11, 2018 5:13 pm
jfn111 wrote:
Fri May 11, 2018 4:24 pm
NextMil wrote:
Fri May 11, 2018 10:10 am
jfn111 wrote:
Fri May 11, 2018 5:53 am
NextMil wrote:
Fri May 11, 2018 4:48 am
Dude. Awesome. Great work. I would pay cash in a heartbeat. I always get seller to pay closing costs, so find a realtor that knows what they are doing with cash offers and you may be able to extract more than just 5k.

30 and a paid for house, strong emergency fund, and dumping cash into retirement. World is your oyster.
Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV
Yes, exactly every market is different, every seller and every agent is different. With $20k and $40k over asking, are you wondering if your realtor priced it wrong given the market?
Nope, we priced the houses to appraise. The markets just nuts right now and people are willing to pay more knowing they will have to use cash to overcome a lower appraisal.
How do you know that $40k was the ceiling? Seems arbitrary. How do you know you didn’t leave another $20 or $40k on the table, especially if it’s so nuts right now, that no seller would consider closing costs under any circumstances?
Any Circumstance? that's funny. if we got an offer for $50,000 over asking with $5,000 back in closing costs we would have happily taken it. :sharebeer

aristotelian
Posts: 4600
Joined: Wed Jan 11, 2017 8:05 pm

Re: Should I pay cash for a house?

Post by aristotelian » Fri May 11, 2018 9:07 pm

Homer wrote:
Fri May 11, 2018 8:02 pm
Are the posters suggesting he invest the money instead of paying cash for the house, currently borrowing money against the equity in their house to put it into the stock market?
I am not currently. I invested for 10 years and then paid off the mortgage with gains from the bull market when I had sufficient liquidity to do so.

Sparkette
Posts: 20
Joined: Thu May 03, 2018 8:23 pm

Re: Should I pay cash for a house?

Post by Sparkette » Sat May 12, 2018 12:47 am

jfn111 wrote:
Fri May 11, 2018 8:14 pm
NextMil wrote:
Fri May 11, 2018 5:13 pm
jfn111 wrote:
Fri May 11, 2018 4:24 pm
NextMil wrote:
Fri May 11, 2018 10:10 am
jfn111 wrote:
Fri May 11, 2018 5:53 am


Good luck with getting the seller to pay closing costs in a seller's market. We put 2 houses on the market last week and sold them both in 2 days. 1 went for $20,000 over asking and the other $40,000 over asking. :shock:
Of course, every market is different. YMMV
Yes, exactly every market is different, every seller and every agent is different. With $20k and $40k over asking, are you wondering if your realtor priced it wrong given the market?
Nope, we priced the houses to appraise. The markets just nuts right now and people are willing to pay more knowing they will have to use cash to overcome a lower appraisal.
How do you know that $40k was the ceiling? Seems arbitrary. How do you know you didn’t leave another $20 or $40k on the table, especially if it’s so nuts right now, that no seller would consider closing costs under any circumstances?
Any Circumstance? that's funny. if we got an offer for $50,000 over asking with $5,000 back in closing costs we would have happily taken it. :sharebeer
In the Bay Area, it would be ludicrous for a buyer to ask the seller to pay closing costs with only 50,000 over asking. Here you could hold out 10 more minutes and get 200-250,000 over asking and not have to pay closing costs.

PhilosophyAndrew
Posts: 450
Joined: Sat Aug 13, 2016 10:06 am

Re: Should I pay cash for a house?

Post by PhilosophyAndrew » Sat May 12, 2018 12:44 pm

OP, I think some crucial information is missing.

(1) Why do you want to buy a house?

(2) What is your current housing situation and what are your current housing costs?

(3) How does the cost of renting compare to the cost of home ownership in your area?

(4) Do you plan to remain single, or are you planning — or at least open to the possibility — of someday living with a romantic partner and/or having kids?

(5) Does your $300K savings constitute your entire investable assets? If not, what other assets do you have and how are they invested currently?

(6) How, if at all, would purchasing a house affect your retirement planning?

(7) How would you use your savings if you did not purchase a house?

(8) How likely are you to remain in your current area for at least the next 5-10 years?

(9) Does your desire to buy a house have anything to do with your forthcoming milestone birthday?

You are considering making a major change and so Pro if f folks with additional information will help your question to garner insightful answers.

Based on the limited informaton you have provided, I’m skeptical. As others have pointed out, many people who are single at age 29 can expect to undergo sonficant life changes in the fairly near term. Unless you vary from that norm, this might be a reason to live with the status quo until those events occur. Why add a house purchase (and possible quick sale if, say, work or romantic changes demand that) to such a dynamic period of life?

Andy.

MrDrinkingWater
Posts: 88
Joined: Tue Dec 23, 2014 11:30 am

Re: Should I pay cash for a house?

Post by MrDrinkingWater » Sat May 12, 2018 1:37 pm

jhowie wrote:
Thu May 10, 2018 8:00 pm
I earn $100k/year gross and take home $60k/year after tax/insurance/401k at a stable job.
You say that you have a stable job. That's great. Is it a job that you want to keep doing for the next 5 years? What if you don't get your next promotion and pay raise soon enough, would you look for employment elsewhere? If so, are one or more other potential employers near enough to the location of your proposed new home so that you would have a livable commute to your next employer?

You may be different than many other younger people. A lot of your peers value job mobility, and if changing jobs, they will move to have the shortest commute or most-civilized commute possible (using mass transit that actually works) . I'd like to see you not have any transaction costs in a too-near future if you think you might likely be changing employers and moving away. Yes, you could always rent out the house, but being a single property landlord is often much harder than it looks.

I do like the idea of paying cash, especially for a reasonably-priced house.

outbackcountry
Posts: 16
Joined: Sat Dec 03, 2016 6:26 pm

Re: Should I pay cash for a house?

Post by outbackcountry » Sat May 12, 2018 6:21 pm

Dave Ramsey will be happy with you if pay cash!!

I was in this situation few years ago. Buying v renting is a separate decision and once a decision is made to buy, pay full cash or mortgage is a separate decision. Shouldn’t mix the two.
As far as mortgage v cash goes, I went with 80% mortgage; as my portfolio return was way more than the 3.3% on the mortgage. Even though the rates have gone up now, it is still low.

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