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Wife and I just both retired and heading south where all us oldies go ... FL!  .  We've lived in our home up here in the NE for ~50 years,  We just sold our home and will be driving south to purchase something smaller and MUCH less expensive in early January.  Since we will be "nomads" for a few weeks until we buy something we plan on paying cash for our new place from the proceeds of our sale to speed up the purchase vs. taking a mortgage.  Really wanted a small mortgage but that could take weeks which would mean paying crazy rental rates ($3500+ a month) or crazy hotel rates where we are heading (central FL just north of Orlando).  We should be able to find a home within 2 weeks or so as people are always "diing" to leave.     People who live in this place are called FROGS because they live there until they CROAK. 

Anyway
My plan is to pay cash then a few weeks later take out a first mortgage on the place when time pressure wouldn't be an issue + sellers like it better.

My basic question is, is there a downside to a first mortgage after a cash purchase vs.a first mortgage upon purchase?  Assuming all things being equal (same bank etc)  are fees etc the same?

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Not really downside of which I have read about (never done it). You would want to make sure that as the buyer your request similar protections to what the mortgage companies usually do, such as termite inspection & clearance letter less than 30 days old, Owner's title policy (get the enhanced kind), and probably a few other things I don't know about.

However, you can afford to pay cash, why would you want to get a mortgage, pay someone else that interest, and service that debt every month?

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um...why exactly do you want a mortgage on the new place?

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Unless you close the mortgage within 90 days of the purchase of the home, you'll be limited on your mortgage interest tax deduction as the mortgage will be treated as a cash out refi rather than a purchase for tax purposes. Probably not a issue unless you're looking at a fairly large mortgage.

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You'd have to pay closing costs twice.

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Make yourself looks to be judgement proof? If so, just take out a HELOC instead.

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I wouldn't not recommend doing a cash-out refinance unless you're OK paying LLPA. You'll end up paying 0.375-0.875% more. See my other thread here for more information - https://www.fatwallet.com/forums/finance/1511559

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Enjoy God's waiting room.

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1) no seller assist
2) less protection that the appraisal will come in high enough for needed LTV

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plan to be patient, take the time, bear the pain, and take a mortgage right the first time in a simple smooth transaction like most home buyers do. why do you want to waste money in the form of closing costs and whatever.....also the due diligence process for taking a mortgage will happen PRIOR to you becoming the owner of the property (if you were to pay cash)... isn't that a good thing always. Yes, there are many things in life where Cash is King....but this is not one of them.
Look at the cost of hotel rooms as a vacation to get acclimatized to the general area (assuming you are talking of The Villages)....if you don't like something...go further down to South Florida beach communities like west palm beach, boca raton, delray beach....a good 1 hour far from Miami crowds....

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solarUS said:   um...why exactly do you want a mortgage on the new place?
  Cheap money assuming OP can get an ROI on it. 

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vegas4x4 said:   Unless you close the mortgage within 90 days of the purchase of the home, you'll be limited on your mortgage interest tax deduction as the mortgage will be treated as a cash out refi rather than a purchase for tax purposes. Probably not a issue unless you're looking at a fairly large mortgage.
  That's not an issue.  Right now the standard deduction with senior allowances precludes deducting interest and the taxes are 1/12th of what we pay up here. 

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vnuts21 said:   You'd have to pay closing costs twice.
  
Huh?  Why would I pay closing costs twice with only one mortgage? 

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dealagain, I don't know anything about OP's destination market, but in many cases an all-cash offer has significant appeal to sellers. The shorter time to close and elimination of a couple of the most common contingencies should give OP a big advantage in getting an offer accepted.

I wouldn't want to rush a home purchase either, but the ability to pay in cash can translate into significant savings that I think would be worth considering.

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dealgain said:   plan to be patient, take the time, bear the pain, and take a mortgage right the first time in a simple smooth transaction like most home buyers do. why do you want to waste money in the form of closing costs and whatever.....also the due diligence process for taking a mortgage will happen PRIOR to you becoming the owner of the property (if you were to pay cash)... isn't that a good thing always. Yes, there are many things in life where Cash is King....but this is not one of them.
Look at the cost of hotel rooms as a vacation to get acclimatized to the general area (assuming you are talking of The Villages)....if you don't like something...go further down to South Florida beach communities like west palm beach, boca raton, delray beach....a good 1 hour far from Miami crowds....

  
  South FL is out.  Still a lot hotter plus there are other reasons.  We spent a month there and just loved it.  Despite all the jokes unless one stays there they have no idea.  We spent a couple weeks in S. FL and there was nothing like it. There are a couple things I don't care for but are far overtaken by everything else.

We really don't have the time.  The costs to look & wait for a mortgage would probably be 10% of the cost of the property.  When we were there for the month of OCT we found 6 homes we would have purchased on the spot.  We put our place up for sale here 10 days ago and it was sold in 4 days for just about asking which was a total shock. We never expected to leave this place until the spring (when rentals are 1/3rd what they are now).  As of Jan 1 we will be nomads.

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MisterEd said:   
vnuts21 said:   You'd have to pay closing costs twice.
  
Huh?  Why would I pay closing costs twice with only one mortgage? 

 
There will be a closing process to transfer title for the first cash sale, too. A little simpler and less expense than if a mortgage were involved, but title insurance, closing services, government recording fees would still be involved.

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SlimTim said:   dealagain, I don't know anything about OP's destination market, but in many cases an all-cash offer has significant appeal to sellers. The shorter time to close and elimination of a couple of the most common contingencies should give OP a big advantage in getting an offer accepted.

I wouldn't want to rush a home purchase either, but the ability to pay in cash can translate into significant savings that I think would be worth considering.

  
This  ^

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blok said:   
solarUS said:   um...why exactly do you want a mortgage on the new place?
  Cheap money assuming OP can get an ROI on it. 

and this ^

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SlimTim said:   
MisterEd said:   
vnuts21 said:   You'd have to pay closing costs twice.
  
Huh?  Why would I pay closing costs twice with only one mortgage? 

 
There will be a closing process to transfer title for the first cash sale, too. A little simpler and less expense than if a mortgage were involved, but title insurance, closing services, government recording fees would still be involved.


  Yes, that is part of the consideration in what to do.

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MisterEd said:   
blok said:   
solarUS said:   um...why exactly do you want a mortgage on the new place?
  Cheap money assuming OP can get an ROI on it. 

and this ^

 great!
In that case, don't do a mortgage..instead study all your choices and do a reverse-mortgage....enjoy your money when you can...

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MisterEd said:   
SlimTim said:   dealagain, I don't know anything about OP's destination market, but in many cases an all-cash offer has significant appeal to sellers. The shorter time to close and elimination of a couple of the most common contingencies should give OP a big advantage in getting an offer accepted.

I wouldn't want to rush a home purchase either, but the ability to pay in cash can translate into significant savings that I think would be worth considering.

  
This  ^

  It has to exceed >2% discount to be worth more than a zero cost/slightly negative cost mortgage.  If it exceeds that, then it's more than you're giving up in opportunity costs and might make sense. (But that still is assuming nothing about the later finance being charged at a higher rate/fees because it would be a cash out finance)

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why not check into orlando.craigslist for short term sublet/vacation rental or renting a furnished room instead of hotel? lot more cheaper and convenient.

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Broker here. First of all, do you even qualify for a mortgage? If you're both retired, then what's your income? Just SS and savings? It still boils down to your debt to income ratio. The way to make a cash offer and get a mortgage also is to make one without a financing contingency, but stretch it out long enough so you can get the financing. Basically you just show proof of funds that you can close with cash in case the financing falls through. If you're paying cash, you can normally close in 2-3 weeks as that's how long a title search takes around here. You basically pay closing costs twice. The first time you're going to be using an attorney/title company, the second time the same attorney/title company so you get a double fee. Also same with the title insurance, I think an owner's policy is about $4 per thousand and the duel issue fee is $175 for both lender and owner coverage. Buying it the first time is just $4, but when you refi it, you'll get hit with either $2.50 per thousand or $1.25 which is the re-issue rate depending on the title company.

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henry33 said:   Broker here. First of all, do you even qualify for a mortgage? If you're both retired, then what's your income? Just SS and savings? It still boils down to your debt to income ratio. The way to make a cash offer and get a mortgage also is to make one without a financing contingency, but stretch it out long enough so you can get the financing. Basically you just show proof of funds that you can close with cash in case the financing falls through. If you're paying cash, you can normally close in 2-3 weeks as that's how long a title search takes around here. You basically pay closing costs twice. The first time you're going to be using an attorney/title company, the second time the same attorney/title company so you get a double fee. Also same with the title insurance, I think an owner's policy is about $4 per thousand and the duel issue fee is $175 for both lender and owner coverage. Buying it the first time is just $4, but when you refi it, you'll get hit with either $2.50 per thousand or $1.25 which is the re-issue rate depending on the title company.
  
Yes we qualify.  Not an issue.  Aside from that we have $0 debt except for existing mortgage which is quite small.  We're pretty much siding with the cash option at this time.  The place we are going says they can close in a week to 10 days for cash and ~2 weeks w/mortgage. They have it down to a science.

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finddeals2 said:   why not check into orlando.craigslist for short term sublet/vacation rental or renting a furnished room instead of hotel? lot more cheaper and convenient.
  
Yea, too many horror stories about CL.  In the specific area everything is expensive.  Orlando is just over an hour which we could deal with if it really was a bargain but again it's the height of the season there.  Vacation rentals are outrageous in Jan anywhere around the area and a furnished room just wouldn't work for us.  Not into that.       Don't want to share either.  We're still looking in the area though.  The hotel (major brand), located right in the heart where we are looking to live is new and is less than 2/3rds the cost of a rental home plus we get a free breakfast and have access to all the facilities of where we are looking and can be cancelled up to 24hrs before arrival.  The only thing we lose is golf & tennis but everything else is still available. 

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MisterEd, while I agree that paying with cash can save a buyer a lot of money, I am concerned about this statement "The place we are going says they can close in a week to 10 days for cash and ~2 weeks w/mortgage. They have it down to a science". Closing in ~2 weeks with a mortgage sounds mighty suspicious. Are you getting sold on something you might regret in the future? Are you getting pressured into buying into some sort of retirement community? I would just say take a deep breath, talk to someone unbiased who you trust and make sure you are doing the right thing. Also, if I were in your shoes I might want to travel a little more before I settled down in one location. Have you checked out other places that might meet your needs? Best of luck to you.

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Your ages, equity left in house & mortgage length can really be problems for the elderly. Believe it, it happens. Suggest you look into those possible hurdles before paying with all cash. Pretty easy to be pre-approved for a mortgage if they'll approve you at all. Seller shouldn't care.

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They will lower your loan to value from up to 97% down to about 75% for starters. You will be stuck with the purchase price as the value , not an appraisal. These are the 2 biggest problems I ran into. But I just used a home equity loan instead of a first mortgage and it saved the closing costs for me so it worked out ok. just bad if your trying to max out how much you take out. 

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MisterEd said:   
finddeals2 said:   why not check into orlando.craigslist for short term sublet/vacation rental or renting a furnished room instead of hotel? lot more cheaper and convenient.
  
Yea, too many horror stories about CL.  In the specific area everything is expensive.  Orlando is just over an hour which we could deal with if it really was a bargain but again it's the height of the season there.  Vacation rentals are outrageous in Jan anywhere around the area and a furnished room just wouldn't work for us.  Not into that.       Don't want to share either.  We're still looking in the area though.  The hotel (major brand), located right in the heart where we are looking to live is new and is less than 2/3rds the cost of a rental home plus we get a free breakfast and have access to all the facilities of where we are looking and can be cancelled up to 24hrs before arrival.  The only thing we lose is golf & tennis but everything else is still available. 

  
Negotiate a long term rate with the hotel, and after 30 contiguous days all the taxes are reimbursed to you as you become a tenant, not a hotel guest. Cuts like 20% off bill.  Have
not done it in Florida.

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Often worse terms for a cash-out refi....not always, but you'll need to shop around more.

Also, is this a SFH or some type of condo? That can have a significant impact.

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Broker here also. SWFL. Please rent, learn the area. We are at almost 100% occupancy for the season of Jan-Mar. Folks book a year or two in advance. I own a seasonal rental condo that is rented for three straight yrs to the same ppl. Problem being, it will be hard to view condos (if that is your interest) during that time. You will be limited as tenants aren't open to showings when paying the high dollar rents. Step back, take a breath. I would want to view everything and get the best value for my hard earned monies.
Just reread your post.....if you are going to a Del Webb/The Villages community spend time there first.  i was there recently, traffic is horrendous. Have had customers that bought at the Villages and regretted their purchase.  Study study study...know what you're getting into.  Lifestyle changes as we age.  JMO. 

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dmandrsn said:   Broker here also. SWFL. Please rent, learn the area. We are at almost 100% occupancy for the season of Jan-Mar. Folks book a year or two in advance. I own a seasonal rental condo that is rented for three straight yrs to the same ppl. Problem being, it will be hard to view condos (if that is your interest) during that time. You will be limited as tenants aren't open to showings when paying the high dollar rents. Step back, take a breath. I would want to view everything and get the best value for my hard earned monies.
Just reread your post.....if you are going to a Del Webb/The Villages community spend time there first.  i was there recently, traffic is horrendous. Have had customers that bought at the Villages and regretted their purchase.  Study study study...know what you're getting into.  Lifestyle changes as we age.  JMO. 

  We have rented for a 2 weeks  in SFL and a month in NCFL which was how we made our decision. SFL is out.  Just about anything in FL is horrible trafficwise in peak season but in some areas if you just drive for 10-15 minutes you can survive.  .

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rascott said:   Often worse terms for a cash-out refi....not always, but you'll need to shop around more.

Also, is this a SFH or some type of condo? That can have a significant impact.

  It a free standing home.  Not interested in a condo. The mortgage we are looking for will be small <50K so LTV won't be an issue.

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cloose said:   They will lower your loan to value from up to 97% down to about 75% for starters. You will be stuck with the purchase price as the value , not an appraisal. These are the 2 biggest problems I ran into. But I just used a home equity loan instead of a first mortgage and it saved the closing costs for me so it worked out ok. just bad if your trying to max out how much you take out. 
  LTV not an issue.

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EradicateSpam said:   
MisterEd said:   
finddeals2 said:   why not check into orlando.craigslist for short term sublet/vacation rental or renting a furnished room instead of hotel? lot more cheaper and convenient.
  
Yea, too many horror stories about CL.  In the specific area everything is expensive.  Orlando is just over an hour which we could deal with if it really was a bargain but again it's the height of the season there.  Vacation rentals are outrageous in Jan anywhere around the area and a furnished room just wouldn't work for us.  Not into that.       Don't want to share either.  We're still looking in the area though.  The hotel (major brand), located right in the heart where we are looking to live is new and is less than 2/3rds the cost of a rental home plus we get a free breakfast and have access to all the facilities of where we are looking and can be cancelled up to 24hrs before arrival.  The only thing we lose is golf & tennis but everything else is still available. 

  
Negotiate a long term rate with the hotel, and after 30 contiguous days all the taxes are reimbursed to you as you become a tenant, not a hotel guest. Cuts like 20% off bill.  Have
not done it in Florida.

  
Now THAT is an interesting thought, I will have to look into that. We were planning only 3 weeks but that could make 4 almost the same cost as 3 assuming all discounts would still apply.

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MisterEd said:    The mortgage we are looking for will be small <50K so LTV won't be an issue.
 

wait...so, you are getting a mortgage to invest and profit from (as you stated earlier), but you don't care to maximize the amount? that counterintuitive IMO.

are you sure you're seeking ROI on this cash-out? or just security?

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solarUS said:   
MisterEd said:    The mortgage we are looking for will be small <50K so LTV won't be an issue.
wait...so, you are getting a mortgage to invest and profit from (as you stated earlier), but you don't care to maximize the amount? that counterintuitive IMO.

are you sure you're seeking ROI on this cash-out? or just security?

  small mortgages are also super-expensive usually. (Very high closing costs, broker/lender gets really small commission for selling the mortgage so you're stuck with paying 100% of the closing cosys plus high lender fees on top of those)

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We had to pay cash for a house back in 2010 when Amerisave couldnt close on time... we had to wait 6 months to refi... YMMV

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dmandrsn said:   Broker here also. SWFL. Please rent, learn the area. We are at almost 100% occupancy for the season of Jan-Mar. Folks book a year or two in advance. I own a seasonal rental condo that is rented for three straight yrs to the same ppl. Problem being, it will be hard to view condos (if that is your interest) during that time. You will be limited as tenants aren't open to showings when paying the high dollar rents. Step back, take a breath. I would want to view everything and get the best value for my hard earned monies.
Just reread your post.....if you are going to a Del Webb/The Villages community spend time there first.  i was there recently, traffic is horrendous. Have had customers that bought at the Villages and regretted their purchase.  Study study study...know what you're getting into.  Lifestyle changes as we age.  JMO. 

 Where in SWFL are you?

Skipping 21 Messages...
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atikovi said:   
MisterEd said:   
atikovi said:   
BigTR said:   Enjoy God's waiting room.
  Or the devil's. You ever been to central Florida in the summer. And yes, it's not the heat but the humidity, but still.

  
Ever been in NJ during  4 weeks of 15 - 0 degree temps and/or 38" of snow with 30mph winds?  I'll take 95 F. and the humidity any time ... that's why God invented air conditioning (or was that Al Gore?) and swimming pools.

  You can always put on another layer when it's cold. You can only take off so much in the heat.

  
Cold worsens my arthritis by a factor of 10 & makes my skin dry.   Some people prefer cold, some like it hot (which is a great name for a movie).  I'd rather hot.  Don't have to buy "other layers" to keep warm just strip down and jump in the pool or turn on the A/C.  Sorry, can't convince me (or my wife).  We've had it with the winters and the $10,000 yr taxes.  We far prefer summers and less than $1000 after homestead allowance taxes. 
 

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