CASH VS. MORTGAGE COMPARISON
Thinking about paying all cash for your next home?
Before you decide, compare how financing part of the purchase could affect your long-term financial picture.
Compare the Two Scenarios
Based on your current assumptions.
Scenario 1
Pay Cash
Cash used for purchase—
Monthly mortgage payment
Mortgage interest paid
Cash available to invest from financing strategy
Hypothetical investment gain—
ConsiderationMore cash is tied up in the home
Scenario 2
Finance Part of the Purchase
Down payment—
Loan amount—
Estimated monthly payment (P&I)—
Estimated interest paid
—
Estimated loan costs (2% of loan)
—
Cash kept available
—
Hypothetical investment gain—
Potential net difference—
When you sell investment assets to pay cash for a home, you stop those assets from compounding. And along with forfeiting investment income:
- Selling assets triggers federal and state capital gains taxes.
- If you itemize deductions, mortgage interest is tax-deductible, which lowers your effective borrowing rate.
- You can't sell a bedroom when you need cash for medical bills, college tuition, or other expenses. Home equity is illiquid. Investments are accessible.
When you finance a portion of your purchase, you preserve assets, maintain flexibility for other financial goals, and continue to earn money on your money.
Want to compare this with your actual numbers?
A loan officer can walk you through cash vs. financing options based on your home price,
available cash, retirement goals, and timeline.
