Cash vs Mortgage: What is the Best Option in 2021April 11, 2021
The debate of cash vs a mortgage when it comes to buying a house came up in a recent discussion. For some people the answer would be it’s a “no-brainer!” However, if you are an individual who is not a part of the 1% category, when it comes to having more money than you know what to do with, then you may not be so quick to hand over all that cash. There are sometimes substantial benefits to doing this. In my opinion the answer is not always as clear-cut.
“The more cash you have is the more attractive you look to sellers.”
It is not uncommon for someone who has the means to pay all cash for a house to take a small mortgage in order to ensure that all their liquidity is not tied up in one asset. This practice ensures that you have enough money available for unexpected events and additional savings.
It is also my personal belief that deciding whether or not to pay all cash for a home depends on certain factors. For instance, if you are purchasing a house to use as a means of income. In this case, the rental income should be enough to cover the mortgage payment and provide additional income for the homeowner. Therefore, this should eliminate the need to pay all cash.
Another factor to consider is whether the total cost to acquire the property will be burdensome. If this is not the case, paying cash may be the way to go. However, if you are in search of your dream home, and are considering using funds which are a part of your investment portfolio, then it may be advisable to consider paying down only a portion in cash and borrowing the rest. You should ask yourself, is the risk of losing the interest on the investments worth the interest you are saving from paying cash?
For anyone who may be weighing their options, it is important to weigh the pros and cons which can help you make a well informed decision.
Before making such a big decision it is highly recommended that you seek out the advice of a licenced professional, such as a Financial Advisor at dianamyrie.com
I would love to know your thoughts re the topic, as well as the article. What would you do if you had the funds readily available? Would you pay all cash for your home, or would you get a mortgage and keep the funds invested?
For further tips and strategies on how to manage your finances you may want to check out my bestselling book “Overcome Lack and Step into Abundance! Your Ultimate Guide to Financial Freedom” available here: https://dianamyrie.com/distributor-list/