Trying to decide if I should pay cash for primary residence or get a mortgage. Considering current interest rate 5%+, what would you suggest?

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Mortgage every time and invest the rest. Run the models. Even if you only get 4% return on your invested money, you’ll come out ahead. Put 20% down to avoid PMI and your invested money should more than cover the monthly payment if you invest wisely.

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Like I said… run the models 🙂 the math doesn’t lie.

Your investments will likely do MUCH better than 4%, and you will likely be able to refi at some point in the future to a mortgage rate lower than 5%, so the above is a worst case scenario. But leverage + investing wins over paying down a mortgage aggressively or paying cash outright for a home every time.

Are there tax advantages on mortgage interest? Not sure your scenario but factor that into calculations.

Also you might be able to refinance later if rates drop.

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The question you should be asking is should you leverage an illiquid appreciating (hopefully) non-income producing asset or not. The answer is leverage the asset at 5%.

smart

How much of your savings would paying in can take away? You can always give a bigger down payment or look at a 15 year mortgage as well.

If you had a house that was fully paid for, would you mortgage it at 5% and invest the proceeds? You need to consider your risk tolerance and time horizon in addition to the return you think you might earn on the investments. It’s very hard to get safe yield greater than 5 %.

Mortgage all the way

Can you use cash to leverage your offer? I know the market is crazy so I am sure a seller will give preference to a cash offer.

Granted I bought my house in 2013 and I got beat out by a cash offer of $20k less than what I was offering (conventional) so you might be able to offer less.

K1-completely agree.

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