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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 account. 

 

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.