Why financing might be a better choice than paying cash for your next home
There’s a common misconception out there that buying a home with cash is always a faster and easier option than financing. If you have the funds to buy a home in cash (congrats on that saving, by the way), financing might actually be a better option. Financing your purchase with a qualified lender offers homebuyers a host of unique advantages that cash buyers just can’t enjoy. If you’re weighing your cash vs. financing options, consider the following:
1. You might want to maintain some liquidity
It’s not wise to purchase a home with cash if you have just enough liquidity to pay for. Doing so can alter your cash-flow after completing the purchase and hinder your ability to access cash in a hurry for unexpected expenses.
2. You could qualify for a solid mortgage
If you have enough cash to purchase a home outright, lenders are likely to also view you favorably for mortgage options. Those options mean you could have greater variety when it comes to the term, length, or rate of your mortgage.
3. Your money may be better invested elsewhere
Buying a home is a great long-term financial investment. But it’s also not the only way to grow your wealth. If you have enough cash to buy, that cash might be able to earn a higher rate of return through other investment options.
4. You’ll miss out on a sizable tax break*
Mortgages occupy a unique and important part of the national economy. As such, provisions in state and federal tax laws exist to give homeowners with a mortgage a tax break on the interest paid to the lender.
5. Guaranteed Rate’s technology
Homebuyer often opt for cash because they’re scared of a complicated and slow mortgage process. But Guaranteed Rate’s strong pre-approval and easy digital mortgage process makes financing faster and more streamlined than ever before.
*Guaranteed Rate does not provide tax advice. Please contact your tax adviser for any tax related questions.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.