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Should you buy a house with cash or take a mortgage? Not everyone has this opportunity, but it is a charming question for people with enough cash.
One guy recently announced this issue in the Henry Finance community. Henry means “Higher Earner is not yet rich”, which attracts many people who are serious about their finances. The original poster contains $ 500,000 cash and wondering whether it makes sense to pay for a new house in cash.
“Friends and family tell me it’s a bad idea,” he said.
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It is important to note that it not only has $ 500,000 cash. The young man also has a $ 330,000 apartment he intends to sell. It also has $ 1.2 million. USD brokerage account and earns $ 15,000 a month at work. In addition, his franchise investment earns $ 5,000 a month.
These are some important points that commentators have raised when discussing whether it is meaningful to buy a house with cash or to remove a mortgage.
Mortgage rates are a critical part of the conversation. If you could go back to time and get 2% or 3% of the mortgage rate, then it doesn’t make sense to buy a house in cash. It is easy to generate a return of more than 3% without high risk.
However, the current mortgage rates fluctuate closer to 7%. Higher rates justify cash offer for a house or increase your contribution. The only way to justify the mortgage is not to pay in cash if you can get a higher return than the interest rate. It is more difficult to consistently submit an annual return on 7%, so cash offer may make more meaningful.
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One commentator also paid for the entire house in cash, but said there were more costs related to being the homeowner. Having to keep up with real estate tax, home care, insurance and other home expenses, the commentator felt that they didn’t really have that place.