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Some people can afford to
pay cash for their home without getting a
loan. (They have a big inheritence, won
a lottery, or have cash from the sale of their old
home.) Should they pay cash, or should they get the
loan anyway?
The answer depends on whether they can earn more
by investing the cash than they'll pay in interest
on the mortgage. If your mortgage is 6% and you
could earn 10% on your money elsewhere, take the
loan. But if the best return you can get on your
money is 4%, pay cash for the house, where you
"earn" a guaranteed 6% by not paying interest.
Back to Basics
of Buying a House
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