Profile picture for hwebster1

is it wise to pay outright for a property

i will be buying property for the first time with a settlement i will be getting
  • July 13 2014 - US
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Answers (6)

Profile picture for hpvanc
I recommend meeting with a Financial Adviser and Accountant, it is possible to find a person who does both. If you go to a Financial Adviser make sure they actually are an Adviser, not a broker. A Financial Adviser does not sell anything and cannot legally accept sales commissions based on his/her advise so you will have to pay them a fee.

Unfortunately if you do decide to purchase property a similar designation/license for real estate does not exist, and you should keep in mind that even if an agent has you sign a contract to the effect that they are your "buyer's" agent most of them still consider themselves salespeople, are paid on commission and do not act in a buying capacity. The SEC made it illegal for an investment broker to call themselves a Financial Adviser with the Investment Advisers Act of 1940. In the past couple of decades many real estate salespeople have begun fraudulently calling themselves "buyer's" agents/representatives with the approval and encouragement of state regulatory commissions, however so far no state has stepped up and defined what it means to be a Buyer's Agent and have allowed commissioned salespeople to define the role, as the total opposite of what it should be.

Good luck, and be careful with your windfall.
  • July 14 2014
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Profile picture for Connie Klemme

it's not an all or nothing choice.  You might also look into an option to pay a large portion down,  keep some money in the bank, deduct that interest...make small payments.

as mentioned before, a financial advisor and/or an accountant can give you reccomendations based on more personal detail.
  I personally like the idea of not having a payment, but if my money would earn more in the bank that I am saving on interest by not having payments...I'd rather have it in the bank. it all depends on lots of details.

  • July 13 2014
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Well - The answer to that question comes down to a combination of what your full financial picture looks like (do you have other savings in the bank? do you have a secure job?)............... and your peace of mind knowing you are living in a home that is paid in full..

Some people like the tax benefits of having a loan and deducting the interest....they also like knowing they have extra cash in the bank

Then,.... there are the people who like the feeling of being debt free.

Which person are you?

I suggest you talk to an accountant.........he or she can discuss any potential tax benefits in obtaining a loan, and what your overall financial situation is..........hopefully, he or she can  help guide. you.

Best wishes!
  • July 13 2014
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It is wise, but it may not be right for you, and frankly, I don't know where you should turn to for advice.

Real estate brokers want to sell you real estate, and we can be well-intentioned, because buying real estate is usually a great idea - in most markets, you can buy a rental that will provide you better and safer returns than almost any other investment vehicle.

"Financial Advisors," for the most part, generally sell stocks, mutual funds, or insurance products, and they may be good vehicles for you, to, but they're as likely to recommend real estate as we are to recommend mutual funds.

All the best,
  • July 13 2014
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Hwebster1-

Good Afternoon.

Great question, the best advice I can offer is speak to a financial adviser, as it's all about where you can get the best, safest, fastest, etc. ROI. Using OPM, based on rates, many times is the way to go. Having your home paid off is nice, but you may be able to do/make more with the monies you don't use. I hope that helps.

Have a BEAUTIFUL day.

-Shawn, REALTOR, AZ.

   
  • July 13 2014
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Profile picture for Outer Banks N C
It can be, but with todays interest rates being so low it could be better to go that route. You need more about you and your situation to be able to say one way or the other. I like that my houses are paid off, I sleep better but I might be better off if they had small loans on them. But I like to sleep at night.
  • July 13 2014
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