Cash or Mortgage?  – What’s the best way make a real estate payment?

Everybody dreams of having their own home at some point in life.  The thing is, real estate property is very expensive and some of us have no choice but to take on a mortgage to pay for our desired homes. Some people are rich enough to pay for the house out of their pocket, while other can save enough over a few years to purchase a home. Making a choice on whether to pay using mortgage or cash is difficult, especially for first time owners. The question remains, which is the best way to purchase a home?

Let’s compare the advantages and disadvantages of both financing methods

Cash

Advantages

There are endless reasons why you should use a cash to purchase your home. With cash payments, you can enjoy all the discounts on your house. Most real estate agencies offer discount for people who pay the full amount in cash. Paying in cash means you won’t have to make the monthly mortgage payments. You buy your home and relax knowing you don’t have any debts. The title deed transfer is easier when you make cash payments. You get the title immediately you purchase the home and clear all the finances.

Disadvantages

Paying your house in full cash will leave you broke for a long time. Making house purchases involves more than just paying the seller, you will have to make some repairs and purchase new furniture if you need to. If you do not have money for emergencies, you will not be able to invest in other businesses. There is no guarantee that the value of your home will appreciate, so it may be a loss on your side. Your house will be more of a purchase than an investment.

Mortgage

Advantages

A mortgage makes a home payment easier of you do not have enough savings in your account. When you have the right plan, making the monthly payments will be easier, you can decide the terms of payment with your lender. You can chose from multiple mortgages with different interest rates depending on how you want to pay off the loan. Mortgages helps people afford their dream houses without worrying about the price

Disadvantages

Mortgage loans come with high interest rates that fluctuate depending on the payment options. At the end of it all, you will pay more money than you actually borrowed. Some mortgage lenders have hidden costs and added fees in their payment structures. This means you will make extra payments like legal, insurance and penalty fees on your mortgage payments. Using mortgage to pay for your home means that you will be in debt for a long period of time. It could take more years to repay the loan if you make minimal monthly instalments.

Final word

The final decision on how to finance a home purchase is on you. if you have enough money saved up you can pay the loan in cash. The money should be in excess if you want to start an investment in the next few years or months. If you do not have enough savings to keep some for investments, you can take a mortgage, start a business and make the payments using your profits.