Is Paying Cash for Your Home Is Better?
Not many people will be able
to save up enough cash to buy an entire house, but if you have done that, you might wonder if it is a good idea
simply because you can. It sure sounds like a good idea, but you should really look into it before giving that
cash away to be sure it is the best idea. There are other places you can keep that money, such as a high
interest bearing account, that might benefit your financial situation even more.
If you have your money somewhere that it is
earning a high amount of interest, and the interest rates for a home loan is way lower than what your money is
earning, you would probably be better for taking out a home loan with the low rate and allowing your money to
continue to grow for you. You could definitely pay the loan off early and could even pay off a huge portion of
the loan, but you will be earning even more money than you are spending by keeping the money in a high interest
Another reason you may want to get a home loan
rather than to pay cash is because by using all the money in your account, it could leave you penniless. You
will still have taxes and insurance to pay, so you will still need some money. There will be plenty of
maintenance and repairs to do as well, so if you have spent every last dime on the house, it won’t be there if
you need to fix or replace something. You might have poor credit, but have a lot of cash, and you could put a
large down payment on a bad credit mortgage, giving you a loan with a fairly low interest rate, but it will not
empty your bank account.
If you do decide that you want to put most of the
cash you have into your house, you can do a cash out mortgage refinance in the future to get that cash back.
Another way to do mortgage refinancing that can get you some cash is a home equity line of credit, so you can
borrow from your equity, but only as you need it, keeping it at a low rate.
If you have cash burning a hole in your pocket,
simply don’t let it. Put it in an account that you can earn some good money with, and get a loan for your home,
and this would probably help you to earn a lot more money in the long run.