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Cash vs. mortgage: Which is the best home buying option?

Money and house on a balance scale

Figuring out how to finance your purchase is an integral part of the home buying process.

When purchasing a luxury home, a majority of buyers opt for a cash purchase because it’s simpler and more discreet. However, buying with a mortgage loan is not without its merits.

Consider your buying options carefully to get the most successful result. We’ve compiled the advantages of each option so you can figure out which one will best suit your real estate goals.

Advantages of buying with cash

  • Your offer is more appealing to sellers
  • To sellers, cash offers carry less risk than those with a mortgage loan. Sellers won’t have to worry about you backing out at the last minute because of financing issues.

    Cash also allows for a shorter transaction period because you won’t have to deal with mortgage paperwork and lender requirements.

  • You can negotiate for a better deal
  • Because sellers are more keen to accept cash offers, they’re also more willing to bargain. You’ll be able to negotiate for a lower price and get the best deal possible.

  • You can skip the mortgage process
  • The mortgage process and its detailed requirements will take you several weeks to complete. But when you buy in cash, the entire process can be done in a week’s time at the least.

    Getting a mortgage also means having to disclose financial information which most upscale buyers aren’t comfortable with. By paying with cash, luxury buyers can speed up the process while keeping their privacy.

  • You can save money
  • Paying with cash lessens your monthly expenses because you won’t have to make mortgage payments. You also won’t have to pay closing costs, private mortgage insurance, and other mortgage associated expenses.

Advantages of buying with a mortgage

  • You have better financial flexibility
  • Just because you have the money to pay in cash doesn’t mean you should. A lot of risk goes into putting so much cash into one asset all at once. The different kinds of mortgage loans available allow you to pick one that can suit your needs best.

    Lenders are more accommodating to luxury buyers, as well. Some jumbo mortgage loans even have lower interest rates compared to conventional loans. This is because high-end buyers have substantial income and assets that make them less at risk to default.

  • You have more money to put into other investments
  • If you use a mortgage to finance your home purchase, you’ll have more money on hand to diversify your portfolio. You’re free to invest in bonds, stocks, and the like whenever you want. With the right use of funds, the returns from your other investments could offset your mortgage payments and offer more growth.

    Paying a mortgage also lets you build equity. You can borrow against your home equity and put it into a second home or another investment.

  • Tax exemptions
  • Who doesn’t love a good tax exemption? Mortgage interest payments can be deducted from your income taxes. These tax deductibles can be used for your primary and secondary homes. Rental properties also have tax benefits, but there are certain requirements that need to be achieved.

  • You have more financial leverage
  • Leverage is when you use borrowed money to increase investment returns. If you buy your home with a mortgage loan and it rises in value, your overall return is higher compared to if you buy it with cash.

Still undecided? Get in touch with our expert real estate agents at Urban Luxe Real Estate. Call us today at 480.359.6519 or send an email to