With mortgage rates of interest still as low as they're, paying cash for a home shouldn't be first on the list of financial priorities. Saving for retirement, building adequate emergency savings and paying off higher interest debt nearly always take precedence. That said, if you have the means to pay cash for a house, there are situations when purchasing your house outright is the way to go. Reasons to help keep your cash - The two various reasons to take out a mortgage even when you can really afford to pay money while maintaining liquidity and maximizing returns. Paying all cash, while commendable, is not a wise idea if it means spending too much of your savings to an asset that's inherently illiquid.
You do not want to get into a situation where you're forced to sell the home or other investment at the worst time possible, says Neil Krishnaswamy, a certified financial planner with Exencial Wealth Advisors in Plano, Texas. In the meantime, with rates at incredible lows and mortgage interest payable in cash is the equivalent of locking in an investment that returns roughly 3% to four percent a year. Take out a mortgage and lock down the historically low rates, but make more than the minimum payment whenever you can. Reasons to pay all cash - On paper, locking in low rates on a mortgage and investing that money instead definitely seems like the better deal right now.
However, what that equation does not account for is the huge sense of satisfaction which comes along with owning your home outright. Yes, odds are that you'll make more over the long run investing those funds, but what you save on interest during the life of the loan tens of thousands, if not tens of thousands of dollars are not susceptible to market downs and ups. At the most competitive housing markets, moreover, cash buyers have the upper hand in bidding wars and also have a better shot at negotiating for a lower price. Add to that savings on closing costs and time spent shopping for a loan, and the deal is even sweeter. Assuming you have paid off higher interest debt, are at most on tax-advantaged retirement plans and have more than enough money in your rainy day fund, paying for a home with cash is not such a bad move.