When buying a home, is it not better to save your money and then buy your home outright...?

Question

...than put down just 20 percent and pay the bank a fortune when your payments are all said and done? I can wait to save for 5-10 years and rent if it means not paying more than I should have to just for a loan.

Answer 1

No.. Get a loan. A house usually increases value over time so the intrest shouldnt make much differance, plus with the economy being down you can buy a house way under appraisal, in 5 years the economy will be back and your house will be worth way more than what you will pay now. Plus renting a house is just throwing money away, when you move you will get nothing, when buying a house you have a valuable asset resulting in more oppertunities for getting money, refinancing, or selling. My dad has paid for his house and his beach house in full ( close to one million dollars) and now with the falling economy he is about to go bankrupt and he will loose his beach house, had he saved his money and had a loan instead he could make the payments long enough for the economy to get better and avoided bankruptsy)  

Answer 2

Its always better to have the money saved instead of taking out a loan

Answer 3

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Answer 4

It is better to pay cash.  But that means that you will be living in a rental for the entire time you are saving money.  I would rather pay a mortgage company than a landlord.

Answer 5

Compare the cost of rent for 5-10 years to the interest a loan would have over the length of the mortgage.   Whatever is less will be your best bet.

Answer 6

Ah, 40 years ago I thought the same way.  Then I realized what inflation did to my buying power.  While I was saving, house prices were going up faster than my bankroll.

When you get a mortgage to buy a well-chosen property, inflation becomes your friend.  Each year when you are repaying the loan, you are paying with less-valuable dollars.

In my opinion, there are two kinds of debt.  Bad debt you know all about.  That is debt to buy cars, boats, furniture and other things that go down in value.  Good debt is debt to buy things that are likely to go up in value, primarily real estate.

Here's another way to look at it:  If you buy a house for $200,000 cash and its value goes to $250,000, you have made $50,000 or a profit of 25% on your investment.

Now, instead purchase four houses for $200,000 each, putting down $50,000 on each of them.  Live in one and rent out the other three.  When their value goes to $250,000 each, you have made a profit of $200,000 (4 x $50,000) or 100% on your investment.

Answer 7

if you can afford to pay cash for a house, heck ya, go for it.

however like only 2.5% of americans will buy a house with cash.

Answer 8

A mortgage loan looks really good on your credit. If you want to have more equity in your home, you can put down more than 20%. You can usually pay extra principle, also to pay it off early, but a mortgage loan in good standing will give you a good credit score.