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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