Buying a House with Cash? Consider These Factors First

House keys over mortgage application form

House keys over mortgage application formThese days, many aspiring homeowners have various options to buy their first home. The programs offered by the government, for example, allow more people to own a house.

But some people think they should buy their homes with cash if they have the money anyway. While it also has its pros, here are three disadvantages that you should consider when buying your new home upfront.

You lose the chance to get financial help from lenders and the government

Let’s assume that your preferred property increases its market value in the next two or three decades. If you get a mortgage to buy your home, your ROI becomes higher knowing that you didn’t pay it in full in cash and you take advantage of the tax benefits you can get. If you don’t want to be tied to a mortgage for 30 years, you can have it refinanced when you get more money. You may also opt for an FHA loan program to make the process of home ownership easier. With proper planning, you can become debt-free in as little as 10 years or even less.

You’ll have to sacrifice your liquidity

For most people, it’s hard to sacrifice liquidity. If you do end up selling your property in the next few years, the process can take more time. If you buy your home in full today, it might take some time to recover what you paid for if you end up selling it.

You’ll end up putting all your eggs in one basket

If you buy your new home in cash, it’s like putting all your eggs in one basket. It has its own set of downside. Diversification is key to making your assets grow. For some people, real estate is a liability because of all the other expenses tied to it. While it is tempting to buy it in cash and not worry about monthly mortgage payments, getting a loan could be better because you’re not putting all your money in just one asset.

There are more benefits to getting a loan instead of buying your house with cash. If you’re planning to buy a house, weigh your options carefully to make the right decision.