Does it make sense for first time home buyer to pay all cash?

Question

As we all know we live in this society where debt is encouraged and rewarded than people paying down things all at once. We all know the incentives to keep this ponzi scheme, of the debt bloated fiat system that is not sustainable, going. The tax incentives for first time home buyers to help with deductions of mortgage interests and so on if you decide to get a mortgage and wait up to 30 years to finally own your home which by then you are probably in your 60s.

Anyways down to the real question here.For a first time home buyer trying to purchase primary residence home, does it makes sense for me to buy the house all cash if i can afford to do it? Like i mentioned about the tax benefits for those that take mortgage and pay off loan over several years..are there incentives or benefits for first time home buyers that are able to stay debt free and buy their houses all at once?

Can i also get some deductions off paying off the house and spread over several years as doing such is no easy task. Open to all your advice and hints and tricks here.

Lets say price of house is like $400k here in New Jersey state.

Thanks

Bjorn Ahlblad · Answer

@Gariner Trinidad for me it would depend on my goals and what else the money could be used for............a 400k home will cost you almost one million at around 4% interest rate. If you can have that money make more by investing it elsewhere then you are coming out ahead. Talk it over with an accountant or FP and see what aligns best with your goals.

Marlen Weber · Answer

@Gariner Trinidad It ultimately depends on your financial goals and other ways you could potentially use the money that are also beneficial to you.

Sam Shueh · Answer

For people in highest income tax there is no tax advantage to borrow. To pay cash has an edge to win sellers hearts as there is no loan processing. Real beat homes no lender will give loan, often that is the only way to get a property. About 20% of home purchase that I have handled has been all cash. This is Silicon Valley, CA.

Steve Vaughan · Answer

I'm more ok paying cash for RE than most, but would be hesitant to turn down 30 year money at 4ish%. Then again, for a few hundred bucks, you could easily get an 80% Heloc to have access to cash if you ever need it.

A primary wouldn't be my first choice to buy with cash, but dumber things have been done. I paid off higher risk, rate and hassle loans but left my primary (15yr @3.375%) alone.

I doubt you are missing any mortgage interest deductions on a $400k primary with the high standard deductions. That's the one bummer 'tax benefit' I don't get with my paid off investment properties but is still a -70% return. Paying $10k in mortgage interest gets me a $3k refund. Whoopee.

Joe Sadusky · Answer

@Gariner Trinidad I agree with @Bjorn Ahlblad its all about your personal goals.

For me, any equity or capital that I can get my hands on- I am reinvesting into real estate to expand my portfolio.

I usually put down the least amount of money that I can so I have more funds for my next investment/project.

Best of luck!

Does it make sense for first time home buyer to pay all cash?

Does it make sense for first time home buyer to pay all cash?

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