Real Estate Law New York – Cash Sales Decline
For many would-be home purchasers, the idea of buying a house in cash is a lofty goal. After years, even decades, of fastidious saving, a homeowner can reap the reward of his or her diligence by purchasing a home outright, avoiding years of expensive mortgage payments.
Recent statistics show that this option is becoming less and less achievable for New York home purchasers. In 2015, the share of homes purchased in cash declined each month, reaching a low of 31.3 percent in June. This is a decline of more than two full percentage points since June 2014, when 33.9 percent of American homes were purchased in cash. This decline can be attributed to a variety of factors, such as increasing home values.
New York was the Top State for Cash Purchases
Cash purchases peaked in 2011, making up nearly half of home purchases made in the United States. That year, New York was the top state for cash purchases, with 47 percent of transactions made in cash. By 2015, New York fell to second place, with cash purchases making up 45 percent of all home sales.
Benefits and Drawbacks of Buying a Home in Cash
At first glance, the decision to buy property in cash might seem obvious. By purchasing in cash, you can avoid a mortgage and the years of compounding interest that will come with it, along with other expenses such as mortgage insurance, inspection fees, etc. However, there are some situations where mortgaging a home makes better financial sense for a purchaser. Some of the benefits of a mortgage include:
- Keeping liquid cash available for other purchases and investments;
- Mortgage interest payments are usually tax deductible; and
- Without a mortgage, you might not be able to take advantage of the homestead exemption if it becomes necessary in the future.
Buying in cash usually means closing on the home faster than you would with a mortgage. Buying a home in cash is easier for both the purchaser and the seller, making a would-be cash buyer a much more attractive customer for a seller. However, if property values decline sharply, it may result in a sharp loss of equity for a home that was purchased in cash, as opposed to a theoretical and temporary loss of equity in the scope of a 30-year mortgage pay-out.
New York Real Estate Attorneys
Buying a home is a big financial decision. If you are considering purchasing a home in cash, it is important that you understand the risks and benefits of this decision. Contact an experienced real estate attorney to discuss your plan before you move forward with your purchase. Whether you intend for the home to be your primary residence or a rental property, it is important to understand the impact that financing the purchase will have versus buying it in cash. Buying property in cash is not always the best financial decision. To determine if it could be the right decision for your situation, contact our team of experienced real estate attorneys at Menicucci Villa Cilmi PLLC at 718-667-9090 today to schedule your legal consultation with us. We have three convenient locations to serve you better: Manhattan, Brooklyn, and Staten Island. Do not wait to start working on your real estate dispute with our firm.
New York Real Estate Attorney. If you have legal questions regarding Real Estate, Mortgage or are in need of a Real Estate Lawyer in Staten Island, Brooklyn or New York contact the Law Firm of Menicucci, Villa, Cilmi PLLC for a no cost case evaluation. We are a Real Estate Law Firm with offices in Staten Island, Brooklyn and New York City.
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