PITFALLS OF PAYING ALL CASH FOR A NEW HOUSE

DEAR BOB: We will soon be buying a brand-new house and paying cash. But I am concerned I will not have the protections of using a mortgage lender or a real estate agent. Do you have any information on what to watch out for when buying a new house for cash? --Larry K.

DEAR LARRY: If you read my articles regularly, I do not recommend paying all cash for any property unless you are so wealthy you won't ever need your cash again (just in case you buy a "bad house").

My best advice is don't pay all cash for your next home. Instead, pay 10 percent or 20 percent cash down payment and obtain a fixed-interest-rate mortgage. If all goes well, after a few years then you can pay off the mortgage without the worry you tied up most of your cash. Of course, be sure the mortgage doesn't have a prepayment penalty.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News