There is a popular notion that having debt is bad, so people think that buying a home with cash to avoid debt is the smartest choice. There are several factors to be considered before deciding on this subject matter.
Buying a property with cash eliminates payment of mortgage with interest, any closing costs, origination fees, appraisal fees, and other mortgage fees. Cash buyers can obtain the property for a lower price and receive a cash discount. Also, a cash buyer’s home is not leveraged, which allows a home owner to sell the house more easily, no matter the market conditions.
Consequently, obtaining financing also has a significant benefit as well. Even when a buyer could pay cash for a home, it might make sense to not tie up a lot of cash to purchase real estate. Doing so could limit your options if other needs arise down the road.
We know these basic facts: cash is valuable if utilized in investments and loses 3 – 8 per cent buying power on annual basis to inflation. Every property is an investment which usually gains value with time and can be a hedge against inflation, saves you rent or earns you rent. On the other hand, if you choose the right property and the right mortgage, the property may pay for itself.