Buying House with Cash vs. Mortgage

Warner Bros. Skygreen
Dec 7, 2019 11 Comments

i have some money saved up and I was wondering if it was better to save an additional 4-5 years to buy a $1.5M house with cash in the Bay area or finance it now withh a 30 year mortgage at 3.5%?

Dave Ramsey recommends buying with cash versus Warren Buffett who says getting a 30 year mortgage is a good idea.

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TOP 11 Comments
  • Amazon TCtothaMAX
    Low rates = take the mortgage. Your money can earn more elsewhere.
    Dec 7, 2019 1
    • Warner Bros. Skygreen
      OP
      The loan cost $1M albeit over 30 years.

      You also can’t quantify the less stress and no burden of a monthly mortgage of $7K.
      Dec 7, 2019
  • Intel / Legal
    Esq.

    Intel Legal

    BIO
    JD Esq.
    Esq.more
    Have you really read Ramsey? (Or his great podcasts?) he talks of paying cash for things to stay out of debt. Housing is good debt. And he is certainly not talking about $1M+ housing. Hes talking about snowball type debt like financing cars and boats and other crap that should be bought with cash.
    You dont want all your eggs (net worth) in one illiquid asset. Paying cash for 1.5m makes sense if you have 5m in the bank. If 1.5m is most of your worth, terrible idea. most everything you own is then tied up in an asset that can take months to liquidate and costs money to sell and maintain. I would put down 500k or whatever amount gets you to an easy monthly mortgage cost, and dump the rest into VTSAX and watch it multiply over the years.
    Source: own a lot of RE, even more VTSAX.
    Dec 7, 2019 1
    • Warner Bros. Skygreen
      OP
      Thanks for the advice!
      Dec 7, 2019
  • Oracle mItn80
    https://youtu.be/BJ3xhjqk52A

    If you will pay 500k down payment and invest remaining 1m with ~5% year gain for 30 years, your 1m will become ~4.5m at the end of the day. It’s equal to ~3x of paid interest.
    Dec 7, 2019 0
  • Apple patek-p
    Talk to a financial advisor, you don’t seem to know how to invest/deal with money
    Dec 7, 2019 0
  • New / Eng lHpK84
    With that kind of cash, you have to account for rates, but also should consider market. If market looks high, just wait it out. If you can find a sweet spot of a low rate plus buying in a housing dip that would be best
    Dec 7, 2019 1
    • Warner Bros. Skygreen
      OP
      What rate do you recommend locking in at? And how long?
      Dec 7, 2019
  • Magic Leap
    pulsemory

    Magic Leap

    BIO
    Love
    pulsemorymore
    Choose your down payment so that you have a good amount of emergency cash left over, but try to aim for a shorter term loan.
    Dec 7, 2019 1
    • Cisco / Other
      masquerade

      Cisco Other

      PRE
      Intel Corporation
      masquerademore
      You can't have it both ways in bay area
      Dec 7, 2019
  • Facebook / Eng
    xDmU52

    Facebook Eng

    PRE
    Amazon
    xDmU52more
    You should be stupid to buy with cash. Invest the same amount in 10 more houses in a good cap rate real estate area and finance all of them. You can get a cap rate of 8% easily and pay your mortgage with that
    Dec 9, 2019 0

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