Should I try to pay for a house in cash, or is this a really bad use of money?
My [24M] wife [23F] and I are just getting started with our careers, and we almost have all of our debt paid off. Our credit scores are great, and we could live off of my salary alone fine, but she will probably be making more than me starting in two years once she finishes law school and gets a job. We are both pretty risk averse, and I’ve always been leery of the way Americans buy a $400k house for a 30-year mortgage (pronounced “debt”) and then end up paying much more for that house over that time period.
So, we have been talking about staying in our apartment for a couple years longer than originally planned and trying to buy a house... in cash. Even if not the whole thing, maybe putting like 60% down or more, and trying to have it paid off within four or five years. To me, it’s about cash flow and getting things paid off as quickly as possible so that if something were to happen to one of us (disability or illness, lose our job, etc), we wouldn’t be screwed and living in a bigger house than we can afford. I’m big on not having debt - it terrifies me.
I told my friends about it and they thought it was a very dumb idea. They said I should put 20% down or so - however much is needed to get the lowest interest rates possible - and then invest the rest. They said I would get better returns through investing, and it hedges against the risk of your house burns down or property values plummet. I get that, but a) isn’t that what insurance is for, and b) the beauty of owning a house outright is that if the property values plummet and the economy tanks... we wouldn’t really care because we own that house. To me it still makes sense to try to buy a house in cash even if it isn’t the best “investment” decision.
Thoughts?
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