Are you diversified? If a small portion of your net worth goes to the house purchase, then your financial position is not at great risk. There is nothing wrong with owning property free and clear.
But, you should consult a financial planner or tax advisor regarding your objectives, needs for tax advantage, appetite for risk, use of leverage and other variables that are unique to your profile. Consider that purchasing all cash will tie up funds that could otherwise be diversified into other investments that produce cash flow .

By itself, I cannot think of a disadvantage other than losing access to the cash -- but that can easily be fixed with lines of credit. However this type of planning should be done with a good financial planner who has a complete picture of your finances and goals and can advise you best.

The advantages to buying cash are obvious, no mortgage payment. You probably would never have to worry about losing your home because of illness or job loss and for some this is a wonderful security. The disadvantages are mostly financial. Mortgage money right now is the cheapest money around, additionally the interest paid on a mortgage on your primary residence is tax deductable which can help create tax savings for you. Monies not used for buying a home can be invested, stocks, bonds, mutual funds, private lending etc. Homes purchased now have been depreciated and should see an appreciation of value in the coming years. So if security is what you seek than paying cash is a great option for you, if wealth building is your goal than a reasonable mortgage on a new home and prudent investment plan might be your your best bet.

Curtis,

This really depends on your personal cash flow. I suggest that you speak with your tax advisor. Sometimes having a mortgage payment may be a tax write off that you need (i.e. the interest portion of your payment). Everyone has different financial goals and situations. Your tax advisor or if you have a financial planner, would be the best source for getting advice on this.

I personally would love to pay off my mortgage if I could afford it. However, I would consider my cash on hand, etc. before doing that. I would need to have a lot of reserves on hand in case of emergencies that might arise and keeping money in the bank for maintenance/updates for the property in the future. It also depends on how much money you have coming in, etc.

So, meeting with a financial advisor or your tax advisor would be a great first step.

If you need help with a real estate related question in the future, please do not hesitate to contact me.

Tina Beasley
Associate Broker
Real Estate Professionals, Inc.
443-243-1832 Cell
410-918-9740 Office