Pros & Cons of Paying Cash For Your Home
Here is a great article from Credit.com on “Should You Ever Pay Cash for a Home?” The first question someone always asks us when looking into a mortgage is “what is your rate?” It’s not about the lowest rate but what is the lowest cost product.
I bet if you called 10 different banks 9 of the 10 would just give you an interest rate. We will not just quote a rate. We need to find out #1 if and/or what you qualify but #2 what are you and your family’s needs, how long do you plan to stay in the home, how much do you have saved, etc?
Even if you have over 20% down saved that does not mean you should put down 20%. Just like the article says, “paying cash for your home likely means most of your savings or at least a lot of your money will be tied up in one asset, leaving less money to invest in other diversified assets. Also, real estate has a historically lower return on investment than stocks or bonds, meaning you could be losing out overall if other investments would have outperformed the interest on a mortgage.”
The bottom line is that this is one of the largest purchases you will ever make so going with the cheapest is very rarely ever the best. You might get lucky but you won’t until it’s too late.