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Ronn Huth
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Ronn Huth answered:
Hi Trav,
I suppose the short answer is could you get a better return on your money elsewhere? The beauty of real estate is the leverage it provides as an investment. For example, if you were to put 20% down you would still receive appreciation on the entire value of the home. Over the long term that would be approximately 5% per year and on other people's money for the 80% you borrowed.
If you do buy cash remember that certain protections the lender builds into a purchase mortgage include an appraisal and title insurance are not automatic. You want to make sure you have addressed these issues.
Obviously there are advantages and disadvantages either way. You should check with your CPA or financial advisor to get the best answer for your situation.
The "Mortgage Professor" Jack Guttentag offers a free spread sheet that helps you compare the value of each approach. http://www.mtgprofessor.com/A%20-%20Purchasing%20a%20House/w…
Hope that helps.
Ronn@BuyersChoiceRealty.com
I suppose the short answer is could you get a better return on your money elsewhere? The beauty of real estate is the leverage it provides as an investment. For example, if you were to put 20% down you would still receive appreciation on the entire value of the home. Over the long term that would be approximately 5% per year and on other people's money for the 80% you borrowed.
If you do buy cash remember that certain protections the lender builds into a purchase mortgage include an appraisal and title insurance are not automatic. You want to make sure you have addressed these issues.
Obviously there are advantages and disadvantages either way. You should check with your CPA or financial advisor to get the best answer for your situation.
The "Mortgage Professor" Jack Guttentag offers a free spread sheet that helps you compare the value of each approach. http://www.mtgprofessor.com/A%20-%20Purchasing%20a%20House/w…
Hope that helps.
Ronn@BuyersChoiceRealty.com
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