Cash vs Mortgage

Cash vs Mortgage

Is it better to buy cash or mortgage your home? In this piece you’ll get the pluses and minuses of both. I am going to jump right into the pluses of cash buying

Pluses of cash buying:

1. No loan, means no interest

2. No origination, appraisal or other lender fees to pay

3. Usually more attractive to sellers

• Less obstacles to close (no appraisal or financing contingencies)

• Not worried about financing being denied

Minuses of buying cash:

1. May tie up a lot of your cash in 1 asset

2. May limit liquidity

3. I recommend you have significant cash reserves in case something major needs to be repaired

4. No tax deductions (cannot write off mortgage interest)

Pluses of a mortgage

1. It may free up capital to invest in higher yielding assets

2. Leverage your debt

• Being able to leverage the house thru HELOC or Cash Out Refinance

3. Tax deductions

• Mortgage interest is generally a tax write off

Minuses of a mortgage

1. Monthly payment

2. You pay more money over time

• Interest adds up over the years!

3. Longer closing timeframe and it is expensive to pay all of the lender feeds

4. Have to be more creative to win the bid

If you’re thinking about that next home purchase and are looking for ways to come up with down payment money, make sure you watch this video! ✌🏾

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