Most people prefer a mortgage because of the tax benefits and the return on investment (ROI) of real estate over the long term. However, depending on your financial and tax situation, I would highly recommend speaking with an accountant or a financial planner about what's best for each individual situation. I'm a Sr Loan Officer with CHASE and would be happy to speak with you. Visit my website, http://www.RickDean.com, for my contact information and I'd be happy to refer you to a great accountant and/or financial planner.

Annie, my advice to you especially given the shaky economy we are in, and assuming YOU ARE disciplined at managing your finances, is to go the mortgage route. Too many people as we have heard here are in pre-foreclosure or foreclosure because of the loss of jobs, medical hardships, or taking too much debt without having the means to pay it back. At least if you can keep your cash safely in an equity indexed tax deferred side fund earning a rate of return, you are ahead of the game. Nothing beats being able to access your equity/cash any time you need it tax-free, while your total cash value is still growing as if you didn't take it out in the first place.

The citical piece is to make sure your ratios for debt vs income support buying the house in the first place.
If not, don't get creative to stretch beyond your means just to get the home. It could/probably will hurt you later.

Real Estate purchased correctly is the best hedge on inflation for the long term and in my opinion the best investment over time. Good luck and ping me at thinz@apexgroupus.com if you want specific information.

Another couple of myths we need to debunk are

"Pre-Construction Prices will be the Cheapest the Properties will ever Sell for, get in now and nothing but smooth sailing ahead!"

and

"New Homes always Sell for more than Resales because they are Fresh and New!"

and

"Use the Builder's Loan Company and Appraiser, it will be cheaper!"

How about the Myth that the 1 month quick sale price will be less than the 4 month market time price,,, on most all of the BPO's being made by those that were taught in the old school? Which sale will sell for less?

I am just one Opinion.

If I were 53 (I believe 53 is the age of the person asking the question) and I had enough cash to pay for a house/retirment house, in this uncertain time, I would probably buy the house with cash. I would probably take a small loan for tax purposes. But for sure, I would not Leverage Out!

There are other reasons to take out mortgages. One might be to help pay for Tuition and Health Care I described the structured payments for tax and insurance payments in another answer.

Here in Florida, where taxes are high, insurance is high, HOA Fees are high, and it is a very soft rental market, BUT THE DAYS ARE WARM, to Leverage Out on Investment Properties would for sure cause a great negative cash flow. If you pay all cash now, and wait for the pendulum to swing back, now that might be your best bet!

Especially for folks from the European, Middle Eastern, and Asian markets to come in and buy with cash or moderate mortgages, while the pices are low, and their stronger dollar!

Did I mention the DAYS ARE WARM IN FLORIDA? Well, about 4 or 5 days in February the days aren't warm. Sometimes it gets in the 30's at night during those 4 or 5 days. And you need to wear long sleaves during the day.

Thanks for pointing out my quote - and that my answer is incomplete. Here is a problem I see, folks love to go with the market momentum (which is almost always a mistake) and possibly get involved with negative amortization loans, interest-only loans, etc...that may not be best for them. MANY folks right now are living that nightmare. And it is a shame. I blame that on loosened lending practices that did things like promise folks a 1% interest rate loans to by their McMansion only to find out that it adjusts 3 points in a 45 days.

Yes - this does require financial discipline. But when executed properly, the problem you are explaining is not a problem. This is a predictable methodology (not scheme) when executed properly. I agree, without the right tools, knowledge and discipline, it may not be right for everyone. But that's what we do, we educate so folks at least have a clearer picture of how to do this properly.

The following is a quote, please read beyond the quote...

(((You should get the biggest, longest, possible mortgage that you can afford - period. People who can pay cash for a house can equally leverage that money MUCH better for a rate of return, safety, and liquidity - something that having all equity/cash tied into the house does not provide. You see equity has NO rate of return being tied into the home - it only grows based on appreciation...but it also can depreciate.)))

I followed this advice from 2000 to 2005. It helped me during that time.

In 2005 I was fully leveraged, getting the FULL Benefits explained above! I was loving life!

Then in 2005, when, what I call the worst real estate nightmare in the USA, came upon us.

I am looking for visitors in my Debtors' Prison. My only phone calls are from Debt Collectors.

I am hoping nobody here goes extreme!!! Moderation Folks! Moderation!

And, wouldn't it be nice to own your own home WITHOUT a mortgage payment and only with the Tax Authorities breathing down your necks?

It is all perspectives and life styles. Don't buy the hype! Use mortgages wisely!

You ask "Cash or Mortgage?"

There are a lot of considerations to consider.

Here is one consideration....

Some folks depend on a structured lifestyle. For example, pay your bills at the first of the month (as in your mortgage, gas/electric, credit cards, and phone bills).

Many times, a Mortgage Payment also includes Insurance and Tax Payments.

Often time, the Lender Insists on these additional payments along with your Mortgage Payments.

The reason the Lender insists on Insurance and Tax Payments in your Mortgage Payment is because the Lender:

1) wants to protect the security of the loan that the Lender made to you.

The security of the loan is namely your home, The Lender wants you to make the Insurance Payments to them so that they know that the Insurance Policy is being paid, They want the insurance paid so if your home was destroyed by those things covered in your insurance policy, the Lender will be paid some or all of the amount of the money they loaned to you (Of course the Lender/Mortgage Servicing Company will take your money and pay the Insurance Payments for you).

and

2) the Lender must protect it's intererest in the loan, and wants to be protected from any forced Tax implications, such as a possible Local Tax Sales (which will take money away from the lender in case the property is sold at a Tax Auction, etc.) (Of course the Lender/Mortgage Servicing Company will take your money and pay the Local Tax Payments for you).

Do you like surprises?

Surpriss like

==> it is now time to pay your Large Annual/Semi-Annual Insurance or Tax Payment?

If not, perhaps a small mortgage will help you keep organised and help you to make a smaller monthly payment for Taxes and Insurance, and also make mortgage payments to your Lender and allow the Lender to pay your Insurance Company and Local Tax Authorities for you!

Might I ask, do you know who to, when to, where to, and how much to, pay your Insurance and Tax Payments to? Better get at least a small mortgage!

This is just one of the reasons why you might want to take out a small mortgage, or to refinance your home,

If this helped, let me know. I will tell you more reasons why or why not to pay cash or take a mortgage.

It is all about LifeStyle!

All depends on what you're buying? If your a "Cash for Houses" investor you'd best have cash and be willing to perform a quick close. If you're a homeowner I belive Tom's advice is very wise. Foreclosure purchaser? Gotta have cash! Are you bottom feeding or purchasing the home for your children's security and your dreams? The irony of this question is my code to enter my response is "Equity"!!!

Save your cash! And I second Tom's suggestions, although they should come with a big huge caveat--his scheme is realistic but it requires very strong financial discipline.

Good luck!

You should get the biggest, longest, possible mortgage that you can afford - period. People who can pay cash for a house can equally leverage that money MUCH better for a rate of return, safety, and liquidity - something that having all equity/cash tied into the house does not provide. You see equity has NO rate of return being tied into the home - it only grows based on appreciation...but it also can depreciate.

Being debt free does not just mean you have no debt, but that you also have the financial resources to pay off any debt. Mortgage debt is the smartest, cheapest, and most leveraged debt for building wealth through home ownership. BUT ONLY IF YOU USE THE EQUITY FOR GROWTH in a safe side fund - and not vacations, flat screen TVs, and other consumable stuff...that will bury you. Example - If you could afford a 15 year mortgage with it's higher payments, you'd be far better off to get a 30 year fixed and take the difference in the payments and invest in a conservative tax-deferred side fund earning in today's about 7.5%. In less than 15 years you would be able to pay off your 30 year mortgage (as if you had the 15 yr) and have a lot more to do even better things - more investing, college tuition, etc...there is SO much folks can do if they managed their finances smarter.

Some of the unfortunate home owners who lost their homes on the Gulf Coast during the hurricanes a couple of years ago now realize if they had their equity seperated, rather than having their house paid off, they could have had the resources to build again, move, do anything to move on with their lives. Lenders with notes on the homes were more relaxing in taking payments during the misfortune. But here's the key point, throughout all of this if the equity was seperated, it would still be earning a rate of return, and available TAX FREE without jumping through hoops to get it. Try getting a home equity loan or 2nd mortgage when you're out of work or disabled - it won't happen easily if at all. The equity management systems and principles we use for our clients is so powerful for building wealth. Most folks only know what they know...including the professionals.

We use this Tiger Woods analogy - many times the media, and gurus try to sell us on buying the latest version of Tiger Wood's club...what we teach folks is how to learn his swing! That is where the real genius and power comes from!

If you have specific questions, feel free to email me direct at thinz@apexgroupus.com
I hope I've cleared up some of your questions.

I would say a mortgage (granted I am a mortgage professional). A mortgage allows you a tax deduction, leverage, diversity, and liquidity. All of these are good things. You can always pay the mortgage off later down the road but it might be harder to get a loan against the property. http://www.BayAreaHomeFinancing.com

Check with your accountant. In most cases, a mortgage works better.