Cash for house or finance?

[Anonymous]

We have some money saved to buy a house with all cash. Should we do that or get financing...maybe a 15 year mortgage? What do you think?

[Anonymous]

I wouldn't tie up so much cash in a home. There's reason it's a leveraged investment.

[Anonymous]

I would pay all cash if you can. I currently have a 10 year mortgage at 3.25% that I'm happy with though, so lower mortgages are a great idea and you can get better rates.

[Anonymous]

It depends on your entire portfolio. What percentage of your portfolio do you want in real estate - particularly your house, which isn't really an investment as you have to live somewhere. Rates are low now, so if you don't have significant assets elsewhere, take a loan and invest the money in the market. Figure out how much you will be comfortable paying for a loan, and what term. Don't just put the rest in a CD or something - you have to put it where it will make more than the interest rate you will be paying on your home.

Also, what are your future earnings propects? Are you retired with no income? Then maybe pay cash. If you plan to still work for 20 years, take out a 15 year loan.

[Anonymous]

If you have enough cash available to purchase without financing, you should consult a financial planner not a bunch of hacks like us.

[Anonymous]

If you can invest your cash and earn a higher return than the mortgage rate (risk adjusted), then don't buy with cash. Otherwise, all cash.
Pretty simple logic, isn't it?

[Anonymous]

Young - finance

Older - pay cash

[Anonymous]

Anonymous wrote:If you can invest your cash and earn a higher return than the mortgage rate (risk adjusted), then don't buy with cash. Otherwise, all cash.
Pretty simple logic, isn't it?

Overly simple logic, that is.

[Anonymous]

If you decide to finance, please contact me for an estimate and proposal. I have helped many DC Urban Moms and Dads. [e-mail] or [phone]

[Anonymous]

Anonymous wrote:Young - finance

Older - pay cash

That's hilariously horribly advise! The last thing you want is to be cash poor if you're "older".

I think no matter what your age is, to tie up your cash in a home rather than borrow CHEAP money is financially stupid. No better feeling than having liquid cash sitting in a money market for example. It gives you security and comfort. Not to mention, you can invest that money elsewhere and make 6-8% while paying the bank 4% AND you have a write-off.

[Anonymous]

Right. When you factor in interest write-offs, inflation, the value of liquid money, etc. your expected return on investment does not need to exceed the interest rate on the loan to make financing a more attractive option. Although it depends on your particular financial circumstances, it is highly likely financing is the better investment.

[Anonymous]

Thanks, guys for your varying advice. We are close to retiring and so we don't need the write offs as much. I'd much rather get a loan and invest the money in an index fund but DH wants the peace of mind of not having a payment every month. I'll try to convince him otherwise...

[Anonymous]

Anonymous wrote:Thanks, guys for your varying advice. We are close to retiring and so we don't need the write offs as much. I'd much rather get a loan and invest the money in an index fund but DH wants the peace of mind of not having a payment every month. I'll try to convince him otherwise...

You're trying to convince him otherwise based on advice you got here? And I am asking in the nicest way possible. If you have enough money to pay cash for a house you have enough money to pay for a fee only financial advisor to do an analysis of your portfolio (and no, I am not a financial advisor but I have had an assessment done and it was very helpful). Please let an objective, qualified third party help you make this decision. In the meantime, read some personal financial columnists and think about how you would feel if you lost 50% or more of the amount you invested in the index fund. I would love to not have a mortgage payment every month and am working towards that (although I'm a ways away from it).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Thanks, guys for your varying advicassuminge are close to retiring and so we don't need the write offs as much. I'd much rather get a loan and invest the money in an index fund but DH wants the peace of mind of not having a payment every month. I'll try to convince him otherwise...

You're trying to convince him otherwise based on advice you got here? And I am asking in the nicest way possible. If you have enough money to pay cash for a house you have enough money to pay for a fee only financial advisor to do an analysis of your portfolio (and no, I am not a financial advisor but I have had an assessment done and it was very helpful). Please let an objective, qualified third party help you make this decision. In the meantime, read some personal financial columnists and think about how you would feel if you lost 50% or more of the amount you invested in the index fund. I would love to not have a mortgage payment every month and am working towards that (although I'm a ways away from it).

I'm the simple logic guy. didn't know you guys are retiring. no, don't invest all your money in stock index. too risky at this age.
It's actually not a bad idea to pay all cash (or st least most cash) assuming that you guys have reasonable amount of retirement fund.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Thanks, guys for your varying advice. We are close to retiring and so we don't need the write offs as much. I'd much rather get a loan and invest the money in an index fund but DH wants the peace of mind of not having a payment every month. I'll try to convince him otherwise...

You're trying to convince him otherwise based on advice you got here? And I am asking in the nicest way possible. If you have enough money to pay cash for a house you have enough money to pay for a fee only financial advisor to do an analysis of your portfolio (and no, I am not a financial advisor but I have had an assessment done and it was very helpful). Please let an objective, qualified third party help you make this decision. In the meantime, read some personal financial columnists and think about how you would feel if you lost 50% or more of the amount you invested in the index fund. I would love to not have a mortgage payment every month and am working towards that (although I'm a ways away from it).

I agree that OP shouldn't invest her money based on anonymous advice from DCUM but if the goal of paying a financial planner is to get an answer to the question of "buy or finance," this strikes me as a waste of money. The planner is not going to tell OP to pay cash.