Home > Property & Casualty > Why not to pay cash when buying a house

Why not to pay cash when buying a house

The U.S. federal tax code makes financing a mortgage exceptionally cheap, so you can go and find better things to do with your cash than using it to avoid taking out a mortgage. To pay cash for a house may seem like a conservative option, but as it turns out it can be risky since it may be difficult to retrieve your money quickly should you encounter some kind of financial disaster.

Also, by limiting your home purchase to the amount of cash you have to put it into, you assume all the risks of equity ownership with none of the benefits of leverage. The benefits include a more significant return on equity, both in your home’s appreciation and in the real day-to-day enjoyment of the benefits that give value to a home in the first place.

If you are considering buying a house, or do not have a mortgage, this insight from our friends at BNY Mellon is a worthwhile read.

Please contact WGA’s Private Client Group for more information.

About the Author

Bruce MacDougall is a Senior Vice President in the Property & Casualty group at WGA and leader of the Private Client Group. His responsibilities at WGA include developing relationships and serving as a resource for WGA clients in all areas of property and casualty insurance brokerage and risk management consulting.

617.646.0279   BMacDougall@wgains.com Connect with Bruce on LinkedIn


  1. Kel
    January 19, 2012 at 11:06 am

    I personally would have never thought that taking out a mortgage would better suite a homeowner rather then paying cash. You would think paying cash is always better…that means no debt! But let’s face it, most average Americans can not afford to purchase a home with cash any how. Although, regardless of the opinions on why it’s best not to pay cash…I would if I could. I would feel much better knowing I do not have that loan out there for 30 years to come.

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