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:
- You will be a much more attractive buyer since sellers are more likely to take you more seriously.
- You could get a much better deal, and are in a much better position to bargain.
- You do not need to undergo the hassle of having a mortgage.
- 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:
- Your money will be restrained to one asset class.
- 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.
- You will sacrifice the liquidity since your money will already be spent on your home.