If you have the money to pay for your home with cash, then why wouldn't you? There is absolutely ZERO benefit to you to have a mortgage. The benefit is to the bank. You obviously have a good income, and you can save money, and if this is a prospective rental property, then the question you should be asking yourself is, "will this home rent, and how much will it rent for."

When you pay cash for your home, all of the income is GRAVY. I would also add that the argument for tax write-offs comes from people who can't do math. Those who believe borrowing money for the sole purpose of writing off interest payments is good economics simply don't know what they're talking about. If you were in the 30% tax bracket, would you be okay sending the lender $10,000 in interest so that you can avoid sending $3000 to the IRS? As much as I hate the IRS, I'd rather partner with them for $3000.00 than the lender for $10,000.00.

Pay cash for that house. It will increase in value over time and it will generate income!!! No brainer.

The best advice I can give you from a lending perspective is this: right now it is difficult if not impossible to pull cash out of an investment property on a refinance. Paying cash for a home, while not at all an unwise move, will officially tie up your cash in that property. Even if you get a small mortgage for $30-50k, that is still that much money still in your bank account.

Take my advice with a grain of salt (My job is to sell mortgages after all) but my suggestion would be go ahead and get an investment mortgage for what you can qualify for and just go ahead and pay it off if you don't like carrying the payments. At least you will have attempted to protect your assets from the get-go.

If you have any questions, feel free to contact me.
Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com

Hi Dave,

You need to speak to your accountant and tax or financial advisor. They will fully have the details and outlines on what is best for you and as Realtors we don't practice investment strategy and financial consulting. It's outside the boundaries of our licensing.

Your are likely to get mixed responses here on why you should and why you shouldn't so I would be very cautious.

We all have our own "personal" reason for financing or paying cash so the reality is that its also "personal" for you.

If you aren't working with a Financial advisor, you should be.

Right now the NAR is fighting off a movement to eliminate the interest write off you apply on your tax return.

Things could change here quickly so it's even more important you seek out a great financial advisor.

Good luck with your investment properties.

Sincerely,


Stew Keene
Inspire Realty Group
GRI, ABR, CNE, MRE, E Pro, AHWD

That is a very good question, and one I am asked frequently, I guess the answer depends on your personal situation. Obviously , if you pay cash then you have no monthly payment so you cash flow immediately, and when your property isn't occupied you have minimal outgoing expense, but if you need immediate cash accessing it could take time. However there can be some tax advantages to mortgaging your properties, and with interest rates being so low this is very tempting, it can also allow you to purchase multiple properties with the same investment. It would also be possible to keep some funds in reserve for emergency exenditures, but you would be responsible for those monthly payments when they are unoccupied. Also your long term appreciation is impacted when yo take into consideration the interest you will be paying. All of these things, as well as others, should be taken into consideration when you purchase an investment property. Good luck and don't hesitate to contact me if you have any other questions.