Paying cash for a home?

Some people can afford to pay cash for their home without getting a loan. (They have a big inheritance, 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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