Thanks for the post, and you ask a very good question!
I have to say that, frankly, whether or not to pay for a home with cash or use the same money as a down payment is a question you should answer with the help and advice of both your mortgage lender and your real estate agent.
Depending on your specific financial situation and the price range of the homes in which you are interested in purchasing, you might be better off offering all cash to the seller than offering to purchase a home with a loan. However, if you believe that a seller may prefer a cash offer over a higher offer with a loan, you will be mistaken. Because almost every seller has multiple offers from which to choose, the one who gets the home is often the person most willing to offer the highest price, rather than cash, for the property.
The only time that cash is more valuable than an offer with a loan is in the purchase of distressed housing...and there are precious few of those around these days.
So, best advice, contact your agent and your mortgage broker or lender and develop a purchasing strategy that will enable you to make a winning offer on a home you really want. Good luck!
Allison James Estates and Homes