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Should You Pay All-Cash For Your Next Home?

By July 15, 2014October 4th, 2016No Comments

Written by Clay Melsheimer

Over the past year, there have been an increasing number of all cash home transactions that have occurred. In 2013, 23.6% of residential property sales were paid in cash, yet in the first quarter of 2014, 42.7% of residential property sales in the United States were all-cash arrangements.

 

Here are the positive reasons why you may be interested in paying for your home in all-cash:

 

  1. You will be a much more attractive buyer since sellers are more likely to take you more seriously.
  2. You could get a much better deal, and are in a much better position to bargain.
  3. You do not need to undergo the hassle of having a mortgage.
  4. You will never have to lose sleep over constantly paying for your monthly mortgage bill.

 

These are the negative reasons why paying for your house in all cash may be a bad investment:

 

  1. Your money will be restrained to one asset class.
  2. Your will lose the financial leverage that a mortgage provides. When you buy an asset with borrowed money, your potential return is higher assuming that the asset increases in value.
  3. You will sacrifice the liquidity since your money will already be spent on your home.
Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNERâ„¢ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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