Buying house with cash

[Anonymous]

Anonymous wrote:Under what circumstances does it make sense to buy a house with cash (no mortgage)? How would you decide, assuming you have the cash to afford the house?

Always. Anyone saying otherwise has ulterior motives or is an agent.

[Anonymous]

Anonymous wrote:
Under what circumstances does it make sense to buy a house with cash (no mortgage)? How would you decide, assuming you have the cash to afford the house?


Always. Anyone saying otherwise has ulterior motives or is an agent.

+1 Most people who pay cash for a house have a lot more money where that came from. Their primary house is not something they leverage. They already have money leveraged in the market or other. The primary house is not a financial investment for them. It is a place to live.

[Anonymous]

For anyone who buys with cash, where do you get it from? From savings in your regular bank accounts or you take out from brokerage accounts or stocks?

Sale of another property/from brokerage accounts

[Anonymous]

Anonymous wrote:If it's a hot market and having an all cash offer allows you to waive the financing contingency and beat out other offers which require a mortgage.

I waived the contingency and still got a mortgage. But it was true that if I could not get a mortgage (unlikely given my finances but I suppose anything is possible), the risk was on me. I could have afforded the house regardless.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Mortgage rates make a huge difference. At 3 percent it’s not a terrible idea because you keep more of your money and get the tax benefits. At current rates you’re paying so much to borrow the money, you’d make more in an investment account.

Do I understand correctly that at the current (high) mortgage rates, it makes sense to pay cash vs at the lower mortgage rates, borrowing would make sense? The mortgage deduction and the SALT cap would roughly be the same as the standard deduction, so the tax advantage of carrying a mortgage is less of an incentive now.

Maybe. Depends on how much your cash can earn for you elsewhere.

[Anonymous]

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

Wait what on earth are you talking about?? Honest question, are you just trolling? Playing the investment return vs mortgage rate arbitrage game makes sense no matter how wealthy you are. Holy smokes that’s scary for you if you don’t realize that

[Anonymous]

Anonymous wrote:

Anonymous wrote:Under what circumstances does it make sense to buy a house with cash (no mortgage)? How would you decide, assuming you have the cash to afford the house?

Always. Anyone saying otherwise has ulterior motives or is an agent.

Wait what??? Omg. No. Depending on where interest rates are.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Mortgage rates make a huge difference. At 3 percent it’s not a terrible idea because you keep more of your money and get the tax benefits. At current rates you’re paying so much to borrow the money, you’d make more in an investment account.

Do I understand correctly that at the current (high) mortgage rates, it makes sense to pay cash vs at the lower mortgage rates, borrowing would make sense? The mortgage deduction and the SALT cap would roughly be the same as the standard deduction, so the tax advantage of carrying a mortgage is less of an incentive now.

I don't understand this point. The SALT cap and mortgage deduction are separate benefits if you itemize. The SALT cap is now $40,000 and then you can deduct mortgage interest on top of that if you max out the SALT, while the standard deduction is $31,500 for a married couple.

You’re both forgetting the salt cap phase down starting at $500K. Doubt most working people paying cash for a house are also making less than $500K in the DC area. Once you hit $600K it’s $10K max again…

[Anonymous]

Anonymous wrote:

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

Wait what on earth are you talking about?? Honest question, are you just trolling? Playing the investment return vs mortgage rate arbitrage game makes sense no matter how wealthy you are. Holy smokes that’s scary for you if you don’t realize that

+1. It’s not that hard to look up property records and find out that most wealthy people have mortgages (the “all-cash” stuff sounds sexier than stating the truth, which is that people waive the financing contingency and get mortgages). Or you can even just check homes.com which has the mortgage information for each property also. Or if you’re really rich, you can also ask your private wealth manager.

[Anonymous]

Anonymous wrote:For anyone who buys with cash, where do you get it from? From savings in your regular bank accounts or you take out from brokerage accounts or stocks?

Largely from equity in the home we sell plus a little extra if we’re upgrading. But we do a bridge loan from our investment accounts to provide immediate cash thus avoiding any contingency based on selling the existing home. Once the existing home sells we pay off the loan (typically within a few months).

[Anonymous]

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

You are wrong. Wealthy people take out mortgages, while those with less money pay in cash. Gates, Bezos, Musk, Zuckerberg, and Buffet all use mortgages even though they have enough cash to pay outright. I don't know any billionaire who supports paying in cash.
Perhaps using cash is something that middle class people or the poor millionaires next door do to escape debt. But wealthy people never pay with cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

You are wrong. Wealthy people take out mortgages, while those with less money pay in cash. Gates, Bezos, Musk, Zuckerberg, and Buffet all use mortgages even though they have enough cash to pay outright. I don't know any billionaire who supports paying in cash.
Perhaps using cash is something that middle class people or the poor millionaires next door do to escape debt. But wealthy people never pay with cash.

Buffet lives in 170k house bought in the 1970th.
Most of the people you listed have multiple properties, I don’t think you know what you’re talking about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

Wait what on earth are you talking about?? Honest question, are you just trolling? Playing the investment return vs mortgage rate arbitrage game makes sense no matter how wealthy you are. Holy smokes that’s scary for you if you don’t realize that

+1. It’s not that hard to look up property records and find out that most wealthy people have mortgages (the “all-cash” stuff sounds sexier than stating the truth, which is that people waive the financing contingency and get mortgages). Or you can even just check homes.com which has the mortgage information for each property also. Or if you’re really rich, you can also ask your private wealth manager.

This isn’t true, it’s pretty hard! I don’t think homes.com would be accurate. Sometimes maybe they’re pulling from public records but they might also be using mortgage calculators and such.

In Maryland, you have to use the land records search which is pretty difficult and you can’t search by address.

I don’t think it’s easy to trace like if someone creates an LLC or for some other reason the mortgage holder is a different entity, it wouldn’t be easy to search.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because you are rich and don't need a mortgage. That's the most common answer. People who advocate for getting a mortgage to leverage low interest rates are not rich. They are still trying to become rich.

You are wrong. Wealthy people take out mortgages, while those with less money pay in cash. Gates, Bezos, Musk, Zuckerberg, and Buffet all use mortgages even though they have enough cash to pay outright. I don't know any billionaire who supports paying in cash.
Perhaps using cash is something that middle class people or the poor millionaires next door do to escape debt. But wealthy people never pay with cash.

Buffet lives in 170k house bought in the 1970th.
Most of the people you listed have multiple properties, I don’t think you know what you’re talking about.

Honestly stop. You’ve killed your credibility. This is simply mathematics. If interest rates are lower than market returns (equity or debt) than it is illogical to not take out a mortgage, unlock that liquidity and get a better return than you would having that cash tied up in the home. Trust me the super-rich aren’t going to leave better returns on the table just because they can afford to be sloppy.

[Anonymous]

Anonymous wrote:If it's a hot market and having an all cash offer allows you to waive the financing contingency and beat out other offers which require a mortgage.

This, and nothing stops the buyer from getting a mortgage -- after closing