Top reasons to rethink buying your house with cash
When it comes to buying a home in a competitive real estate market, there might be some benefits to purchasing a home with cash. Depending on your finances and future projections for your home, you may want to hit the breaks before emptying your coffers. There are a few benefits for your bank account and credit, should you choose to hold off on paying entirely in cash for a house.
Missed benefits of a mortgage
Plunking down a significant amount of cash for a house helps avoid taking on a mortgage, but there are some benefits if you had one. The government gives homeowners who carry a mortgage a tax break on the interest paid up to a $10,000 limit.If you only have enough cash to cover paying for a house, you might want a mortgage as a safety net in case of an emergency.
Cash is a liquid asset. If you take the plunge to pay for a house with greenbacks, you’ll have to ride out any unexpected events. Even if you own a home outright after paying with cash in full, you might have difficulty securing a loan or extending your credit line if needed.
If you have enough cash to buy a home, you could hold onto more money with a 20% down payment and mortgage instead to finance an abode.
No sure bets for wealth
Decades ago it might have seemed a safe bet to buy a house as an investment, with the projection that there will be capital gains in the future. However, the housing busts that have occurred should wake people up to the reality that a house is a utility with the potential for cash flow, but still can subject to losing its value.
If you have enough cash on hand to purchase a residential property, there are safer investments that won’t leave you hanging with expenses for maintenance or emergency.