Thread:
Let's say you wanted to buy a $320,000 house.
And you HAVE the $320,000 to pay cash.
What should you do?
Well, first let's look at what happens if you finance the entire thing.
(yes, I know that's higher than what most of you will be charged.)
If you add those up, you not only paid the $320,000 back, you also pay $298,419 in interest.
'YOU BOUGHT THE HOUSE TWICE!!
WHAT THE HELL WERE YOU THINKING, DUMMY?!?'
Are they right?
Well, sorta.
They are correct that you WILL pay almost double what the house cost over 30 years.
But, here is what they leave out
In 30 years, you would have EARNED $1,109,678 in interest.
So, you would have a grand total of $1,429,678 in your bank account.
And, your house is now paid off, and probably worth $1 million also.
But, if he's right and you earned 12%,
Your $320,000 would be worth $9,587,175 (!!!) in 30 years.
However, let's forget him for a moment and go back to my humble 5%.
Here is the question:
I would argue you are much better off keeping YOUR money in YOUR hands, and using the bank's money to buy your residence.
Especially since interest rates are likely LOWER than 5%, and you can likely EARN more than 5%.
Want more #MortgageAdvice ?
Anymore questions?
Fire them off and I'll get to them over the next few days.