Real Estate Investing - To pay cash or finance: The ongoing debate

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To pay cash or finance: The ongoing debate

wangchieh@wongfaye.com

2006-11-10, 1:25 pm

Lets use the following example. Lets take the average American house
price: 180,000. If the buyer has 180,000 in cash available, does it
make more sense to buy the entire house in cash or should he/she
finance?

-Lets assume the buyer will have enough left over after the purchase
for emergencies, living expenses, etc.
-The buyer can get 5.50% APY on his/her high-yield savings.
-If the buyer gets a 30-year fixed-rate mortgage, they will be paying
6.32% APY.
-Lets assume the buyer has a combined household income of 60,000.
-Lets also assume the buyer cannot, or is not willing to risk finding a
higher return on his/her money and decides to stick solely to the 5.50%
APY high-yield savings account for investment purposes.

What would be the best course of action for this buyer in general?

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