Maricar Borlagdatan
Nothing says “successful” than having your own home. Everyone dreams of owning a property that they can be proud of. We often work hard day and night just to save up for that dream home that we all deserve.
Fortunately, there are ways in which you can buy your dream home right away even though you still don’t have enough money. Home loans exist so that home buyers can invest in a property right away. But some actually prefers saving the money first before buying the property through cash.
So, which way is better? Buying property through cash or loan?
Paying with cash
Advantages
- Avoid all the paperwork – We all know that applying for a home loan can be tough, especially when you have a bad credit history. It’s easy to get discouraged from getting a home loan with all the paperwork and IDs that you have to complete. Paying through cash can ease the stress of paperwork and avoid questions about your credit score.
- Avoid unnecessary debt – Who wants debt anyways? Paying through cash can help you avoid debt and use the money that you’re going to earn in the future for other investments.
- Goodbye credit history – Many people get anxiety over credit history and this might stop them from buying the property that they want.
Disadvantages
- Emergency fund issues – What if you invested all of your money in a property and have nothing left in case of an emergency. Make sure that you are financially well equipped to avoid this dilemma.
- Tied assets – Instead of investing money in different assets, you are tied down to a single investment.
Paying through loan
Advantages
- Finance other investments – Paying through loan can help you invest not only in a property but to other assets like a car loan, school savings, etc. You do not risk liquefying your assets because it’s not tied to a single entity.
- Tax advantages – Mortgage rates and real estate taxes are deductible, giving you less tax to pay.
- Own your property right away – No need to wait for years. You can now finance for your dream property as long as you have enough down payment and have good credit score.
Disadvantages
- Facing foreclosure – When you fail to pay the mortgage, the property may go to foreclosure and you will lose all the money you invested in it.
- Unreliable payment agreement – Payment agreements for loans may change from time to time. There will be times when your bank or lender might increase the amount that you pay per month.
The bottom line
There’s no clear-cut answer on which type of payment you should choose. In the end, choosing the payment method is up to your long-term goals and current financial situation. If you have enough money to shoulder the responsibility of owning a home then buying through cash shouldn’t be a problem. But if you’re still saving up and want to see where your hard earned money is going, then getting a loan is the way to go.
