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Forum » Getting a mortgage vs buying a house outright with cash?
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Thread: Getting a mortgage vs buying a house outright with cash?

post 1666887793 08-28-2022, 08:16 AM
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Who tf is this Bruno guy with his dear diary fairy tale story ?
post 1666888103 08-28-2022, 08:23 AM
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First, having cash you'll be first pick for the seller and you won't have to offer as much. Closing cost are much cheaper and the closing process is more simple and much faster. If you change your mind you can refi on your own time and have more options. Usually better deals on insurance as well. Say you lost your job or some other situation where you couldn't work, you have no mortgage, that could really help. I have a 3br with a MIL in the finished basement. I bet I could rent out the two bedrooms and the MIL and clear at least $2K a month but I just don't want roomates when I don't have to but if I did, it would be there. Yes you could do that with a mortgage but could you live on it?

Those who go into debt to invest the money (Miscers and their index funds) you are playing a dangerous game.
post 1666888703 08-28-2022, 08:35 AM
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My first mortgage is at 1.69%, that’s free money

Even at current mortgage rates, which are still historically low, why would you not use the bank’s money rather than your own?
post 1666889593 08-28-2022, 09:00 AM
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Originally Posted By LargePeter⏩
Retard
Okay so I'm a retard for buying an asset that actually exists while you take on debt own nothing for worthless fiat currency that is minipulated by the government to the breaking point. Even if you make more if it it's all fake and the only reason it has any value is people think it has value. It could collapse. The bank owns the house and if things collapse it's their house and you can bet that when push comes to shove you'll find that out. This century is tracking the last one in a scary way (even having a pandemic about the same time) and a lot of what's going on now we saw 100 years ago, and 1929 was a beeyotch. My great great grandparents owned a farm, owned almost all of Marrion County in Ohio and were almost unaffected by the depression. In fact, it was those who actually owned assets who benefitted. Bill Gates and all these super rich people buying up land, they know what's going on.

In the end, you might have a lot more wealth than I do. Chances are you'll have a little bit more but not anything dramatic. However there is a higher chance that crap could go south and you'll end up broke with nothing and honestly you're playing a game where if you don't have enough money to buy your home outright you don't need to be playing. I'd much rather retire a couple miles inland from the beach where I have to drive a golf cart to it rather than take a chance having a condo on the beach or ending up in government housing somewhere in south Orlando.
post 1666889773 08-28-2022, 09:04 AM
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Originally Posted By Jasonw1178⏩
Okay so I'm a retard for buying an asset that actually exists while you take on debt own nothing for worthless fiat currency that is minipulated by the government to the breaking point. Even if you make more if it it's all fake and the only reason it has any value is people think it has value. It could collapse. The bank owns the house and if things collapse it's their house and you can bet that when push comes to shove you'll find that out. This century is tracking the last one in a scary way (even having a pandemic about the same time) and a lot of what's going on now we saw 100 years ago, and 1929 was a beeyotch. My great great grandparents owned a farm, owned almost all of Marrion County in Ohio and were almost unaffected by the depression. In fact, it was those who actually owned assets who benefitted. Bill Gates and all these super rich people buying up land, they know what's going on.
but you cood invest the differenece in index funds
post 1666889993 08-28-2022, 09:08 AM
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Originally Posted By IamHarmsWay⏩
but you cood invest the differenece in index funds
Right? The moment someone talks about index funds I know they are not someone who should be investing their life savings.
post 1666890463 08-28-2022, 09:21 AM
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Originally Posted By Jasonw1178⏩
Okay so I'm a retard for buying an asset that actually exists while you take on debt own nothing for worthless fiat currency that is minipulated by the government to the breaking point. Even if you make more if it it's all fake and the only reason it has any value is people think it has value. It could collapse. The bank owns the house and if things collapse it's their house and you can bet that when push comes to shove you'll find that out. This century is tracking the last one in a scary way (even having a pandemic about the same time) and a lot of what's going on now we saw 100 years ago, and 1929 was a beeyotch. My great great grandparents owned a farm, owned almost all of Marrion County in Ohio and were almost unaffected by the depression. In fact, it was those who actually owned assets who benefitted. Bill Gates and all these super rich people buying up land, they know what's going on.
The lender can call up the mortgage and demand it be settled. If you have the cash on hand to buy it up front, why not finance and have cash ready in the unlikely event that happens? It's not like the bank wants the house, they just need the money back.



Having the money in hand IMO offsets more risk than just paying off the house. Say you buy a house worth $350k, you have $350k in cash, and you net $4k/month while your expenses are $3500. If you finance and hang onto the $300k, that will cover your living expenses for 7 years if things go sideways and that gives you a lot of opportunity to sort things out and get back on your feet.

The other option would be paying early and then trying to pull equity out for living expenses, but you can likely do many better things with the money in the interim
post 1666891033 08-28-2022, 09:41 AM
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post 1666891103 08-28-2022, 09:42 AM
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Originally Posted By Destor⏩
The lender can call up the mortgage and demand it be settled. If you have the cash on hand to buy it up front, why not finance and have cash ready in the unlikely event that happens? It's not like the bank wants the house, they just need the money back.



Having the money in hand IMO offsets more risk than just paying off the house. Say you buy a house worth $350k, you have $350k in cash, and you net $4k/month while your expenses are $3500. If you finance and hang onto the $300k, that will cover your living expenses for 7 years if things go sideways and that gives you a lot of opportunity to sort things out and get back on your feet.

The other option would be paying early and then trying to pull equity out for living expenses, but you can likely do many better things with the money in the interim
So you keep cash in hand while paying interest on a loan? Unless you are investing that money in which it's not cash in hand and if things collapse then you won't have that money? That doesn't make sense. I get what you mean, I understand the investment strategy. If that's what you want to do then by all means it's your money and your decision as a grown adult but don't call someone a retard because they don't agree with you trying to get them to make a more risky investment strategy that could ruin them. Don't you think that before I bought this house and I had over 200K in the bank I looked into things and considered my options? Of course I did and I went with what is best for me. I don't think that makes me a retard. When it comes to big decisions I tend to go with security. Although I may have missed some opportunities in the past, I haven't made some of the massive mistakes others have made. I think I'm far from a "retard".

Also, when you own outright, don't have any payments to make, financial obligations, it allows you to make other bold moves that might beat out 99% of investments. Bet you that most of these people who are explaining why they are taking a mortgage instead of buying cash is that they don't have the cash to spend in the first place. Just like these rentcells who talk about how they are investing the money they save, it's complete BS 99% of the time. IT'S CALLED COPE.
post 1666891173 08-28-2022, 09:45 AM
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Originally Posted By Vascularmanlet⏩
Income yes deposit no, I only have 10k savings (yeah I know I should have more but I didn't save for years)

However because I live at home I can easily save 1k+ a month so can hit over 25k in 1-2 years.

How long is your mortgage term?
30 years, 1.6 interest was a 5 year fixed. Solid investment and makes me a small profit every month ontop of having nothing but 50% of a electric bill every month.

Live at home for another year or 2 limit eating out hoors until you move out to your own place. 10k is a decent place to start youll get the better interest rates once you have 25% of the value of property.
post 1666891323 08-28-2022, 09:48 AM
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Originally Posted By Goat_187⏩
If you have enough saved to buy outright I would assume youre smart enough to leaverage and use the banks money…
This, and honestly, with the cost of a decent house today, I wouldn't feel comfortable giving that kind of money up. Liquidity is king.
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post 1666895053 08-28-2022, 11:09 AM
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Ten years from now it will take you another ten years to save enough


Houses tend to increase in value over time


I bought my house with a mortgage 3 years ago

It’s almost doubled in value since then because the market in my part of the country is on fire
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post 1666898453 08-28-2022, 12:12 PM
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Originally Posted By IlChosenOne⏩
Ten years from now it will take you another ten years to save enough


Houses tend to increase in value over time


I bought my house with a mortgage 3 years ago

It’s almost doubled in value since then because the market in my part of the country is on fire
That's the only thing that sucks is that if you were to sell, buying a new home would also cost more. I think it's going to settle back down but then it will creep back up again you'll need $1M for any house that is of a decent size with a garage, yard, in a nice area.
post 1666898853 08-28-2022, 12:21 PM
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It makes way more sense to leverage the banks money and then invest the rest. You should be able to earn at least 8-10% on that money

Plus there are write offs
post 1666899793 08-28-2022, 12:41 PM
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My house cost 462k, I put 120k down
I had a loan at 5% on the other 342k, I paid it off

Let’s assume I could make 10% on the money
So I would make 5%(10% - 5% interest expense) on 340k, which comes to about 17k per year

Is The $17k taxable? If it’s cash, then I’m assuming yes as the Roth limit is 6500
I’m paying around a 27% tax rate, so that brings my return down to $12k
In down years, there are no returns (like the one we are in) or reduced returns

If the return is not taxable , Are you wanting to lock up 340k until retirement?

So, does the peace of mind of not having a house payment worth $1k a month?
For me, absolutely , especially considering I’m already saving over $100k per year pre and post tax and I’m the sole provider of a family of 5

There is always risk to leverage
And
There’s always an opportunity cost
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post 1666899833 08-28-2022, 12:42 PM
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It's more complicated than that in your case ibby.

Interest rates are currently going up and in 12-18 months when you have saved enough for a deposit, it is probably going to be the worst time to get a mortgage since before you were born.

Any move you make is going to have risks associated with it (interest rates v house price v timescale v a bunch of other variables), so you have to decide which flavour of risk is the most palatable to you.
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post 1666900413 08-28-2022, 12:52 PM
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When it comes to real state you can’t Dave Ramsey it, cause his advice are more for families that would only own one property at a time in their lifetime.

You aware of Ben Mallah? If not watch all his videos, he explains all his purchases and leverage in detail.

Watch this one, he gives danny ducan the cliff notes on how to buy real state in a few minutes.

post 1666901573 08-28-2022, 01:14 PM
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Originally Posted By Anachron⏩
Paying off your house early is one of theworst financial decisions you can make.

Not saying it's a bad decision, but it's one of emotion, not financial sense.
Lol.

It's not optimal, but I wouldn't say it's the worst decision, nor even that it doesn't make financial sense. Returns aren't guaranteed.
Virtue is its own reward.
post 1666901853 08-28-2022, 01:19 PM
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Originally Posted By iamharmsway⏩
i bought my house with a mortgage 3 years ago

it’s almost doubled in value since then
just lol

fake af
post 1666902213 08-28-2022, 01:27 PM
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For the guys that say to leverage, do you also borrow/invest on margin?
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post 1666902343 08-28-2022, 01:30 PM
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Originally Posted By BigDeeps01⏩
It makes way more sense to leverage the banks money and then invest the rest. You should be able to earn at least 8-10% on that money

Plus there are write offs
You can literally make the same return with a house, if you do your due diligence and buy in an area that will increase in the next 10-15 years. There are markets in the country right now that aren't reflecting the nation, and will sky rocket in value in the next decade.

Buying your home that you live in full-time in cash isn't a bad investment. You're not going to make income from your home, unless you're renting out rooms or buy a multi-family house. I personally wouldn't want to share my home with tenants, but that's me. Now buying real estate to make an income off of, makes more sense to take out a loan and leverage the banks money. (Ded fkn Srs)
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post 1666902493 08-28-2022, 01:32 PM
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Originally Posted By Anachron⏩
You only need to justify your financial decisions to yourself.

The fact that you feel compelled to justify them to anyone else says more about you than the people you are trying to put down.
how am I trying to put anyone down?
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post 1666902563 08-28-2022, 01:34 PM
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Originally Posted By Anachron⏩
I am just putting your post into context.
so do you invest with margin?
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post 1666902793 08-28-2022, 01:37 PM
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Originally Posted By Anachron⏩
How does it make a difference to you?
it doesn’t, just a simple question


I’m curious about the logic of using leverage on one’s house vs using leverage on your investments
Why one is preferred over another , where does the risk tolerance stop, etc

Sounds like your not willing to disclose, no worries
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post 1666903073 08-28-2022, 01:43 PM
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Originally Posted By Anachron⏩
Sour grapes over me calling your poorly disguised strawman that you use to justify your financial decisions to yourself.

But about the bolded, thanks for confirming that you have the financial sense where paying off your principal residence, at historical low interest rates, with rates locked in for 30 years, actually made the most sense.

Have a nice day.
lol, all I asked if u also used leverage on your investments and this is the response I get


Have a good one!
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post 1666904573 08-28-2022, 02:07 PM
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Originally Posted By Anachron⏩
Sour grapes over me calling your poorly disguised strawman that you use to justify your financial decisions to yourself.

But about the bolded, thanks for confirming that you have the financial sense where paying off your principal residence, at historical low interest rates, with rates locked in for 30 years, actually made the most sense.

Have a nice day.
Originally Posted By 5x10⏩
lol, all I asked if u also used leverage on your investments and this is the response I get


Have a good one!
Rofl nothing like a good ole misc mudfight.

Personally, I've always been taught to put the money towards better investments like other brahs are saying. This is what every wealthy person I know IRL does.
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post 1666909983 08-28-2022, 03:42 PM
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Originally Posted By OffwhiteBrah⏩
Who tf is this Bruno guy with his dear diary fairy tale story ?
Dear diary. Keep paying rent.
post 1666910303 08-28-2022, 03:50 PM
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Originally Posted By IamHarmsWay⏩
who the **** has bout 350k cash on hand tho? LMAO
why do you think so many houses are off the market the same day?

cash offers happen all the time. I had to over asking to beat out cash offers when i bought my condo. Luckily, next year we'll be the ones making cadh offers
post 1666927913 08-28-2022, 09:36 PM
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Originally Posted By 5x10⏩
For the guys that say to leverage, do you also borrow/invest on margin?
this is actually a good question. In my situation yes when the need arises.

You can see the responses here are primarily divided into two groups. Those who have risk tolerance and those who do not.

Those who would pay off their mortgage entirely are likely to invest their money in safer instruments such as bonds or term deposits.

Those who would use their excess Capital to invest additional real estate or other instruments of course have a higher risk tolerance. There is no right or wrong.

You just need to decide for yourself what your goals are and what your abilities are i.e. do you have the competence to manage your own investments (or willingness to learn).

It comes down to this for the average person. If you are unable or unwilling to put your money into other instruments aside from your principal residence, you have a higher chance of not experiencing a comfortable retirement. That is a fact.
post 1666928523 08-28-2022, 09:50 PM
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In the US you're better off getting the tax breaks with a mortgage.

When I get my $2 million I'll probably still have $200K of a mortgage and then invest the rest, or retire and live off of it.
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