Getting ready to build on to our house. We have the cash to pay for it, but is there any benefit to taking out a loan then paying it off?

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  • tro
    Lv 7
    3 years ago

    and why would you do that

    I really shouldn't be critical since actually when I bought my Z car in 1971, I obligated my money in savings as collateral and paid myself back, so to speak, without having to get a car loan and pay interest

    when the amount I was advanced for the car was paid, the savings account was released

  • 3 years ago

    I am one that would never pay all cash to purchase a house.

    In using this large amount of funds you are tying up money that you could possibly get a better return on by investing the money some place else.

    Currently our federal income tax laws allow you to deduct the interest rate from your taxes.

    If something happen,where you need a large amount of funds, you would need to refinance the house to acquire these funds. A refinance is expensive.

    There are other reasons why I would never pay all cash for a house.

    You would need to consult with your financial advisor to see what is best in your financial situation. Based on this information you would be able to make an intelligent financial decision that would benefit you.

    To pay cash or acquire a mortgage is a personal decision.

    I hope this has been of some benefit to you, good luck.

    "FIGHT ON"

  • 3 years ago

    If you have the cash, it's probably the best route to go, since you'll never have to worry about a mortgage or loan payment, unless you want to use those same funds to invest in something else.

    The reason why some people take out mortgages when they can pay cash is because they don't want all or most of their money tied into ONE investment (their home). They also know they'll eventually sell when the market goes up and they still make a ROI with have only put down a down-payment with a mortgage loan.

  • 3 years ago

    If you can get an equity loan at a great interest rate why not. But you are paying on the interest. If that does not bother you then yeah use O.P.M. (other peoples money)

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  • 3 years ago

    That takes some number crunching to give you the best answer. Paying cash is a great way to avoid paying interest. But having too much money tied to one investment may not be the best choice if the money can earn more than the cost of interest elsewhere with further consideration to the mortgage interest tax deduction.

  • 3 years ago

    I prefer paying cash. And put into savings and investments the monthly payments you would have had if you took out a mortgage.

  • 3 years ago

    You can deduct mortgage interest paid from your income, so it really depends on your income.

    Consult an accountant, they can help you run the numbers.

  • Anonymous
    3 years ago

    I would only suggest a loan IF it runs overbudget/hits any unforeseen delays, etc. Also, cash is king; you can probably negotiate a great deal with the builders with cash. My younger brother was one for 30+ years and said that the jobs which paid quickly always went to the front of the queue.

  • Anonymous
    3 years ago

    There could be.

    If you can invest that cash somewhere else that will make more money than your mortgage interest rate, then go for it.

    But if you would blow that cash on vacations, restaurants, clothes, tech gadgets, etc. while you're stuck with a mortgage payment, then you're better off paying cash for the house .

    You haven't given us any details about the cost amount, your income, your expenses, the interest rate, loan term, your investing savvy, your age/stage of life, etc. All of these are factors.

    You also haven't told us whether the money you've saved is actually in CASH or whether it's invested in assets that will have to be liquidated thereby creating a taxable capital gain in order to use the money.

  • Anonymous
    3 years ago

    Loan "fees" aren't worth it. If you can comfortably pay cash, enjoy the clear title

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