This presentation conveys two approaches to paying for a house. Financing with a mortgage and self-financing by paying cash. |
When thinking about how best to pay for a house, it’s important to consider your options. If the rate of return you earn on your savings is equal to the interest on a mortgage, your house will cost the same either way. In other words, if you use a mortgage you pay interest and earn interest on the money remaining in your tank. If you use your cash, you pay no interest, but also earn no interest. There are two ways to have a house paid off. A house with no mortgage and a house with a mortgage plus a savings account with enough in it to pay off the mortgage any time you like. If you do have a mortgage and money in a savings account, you will have access to capital for other financial opportunities. Many think having no mortgage is a financially secure position. And it certainly is. But, perhaps a more secure position would be to have a mortgage and a large savings account that can be easily accessed for any family emergencies. |
No math presented on this screen. |