Con #2 – Paying cash for a property may limit your investment opportunities. By tying up all your cash in one asset, you severely limit your ability to take advantage of other opportunities in the future. If your goal is to invest in real estate, taking the mortgage route may help you diversify your portfolio better.
Con #3 – Paying cash for a home makes you ineligible for some tax deductions. The federal government gives tax deductions for mortgage interest, which you won’t qualify for since you don’t have a mortgage or mortgage interest.
Con #4 – Paying cash can put the seller in an awkward position. Because a cash offer requires less preparation and usually closes much more quickly than a traditional one, the seller may not be prepared to move out so quickly. This may cause a problem, especially if the seller hasn’t found a new home to move to yet.
Con #5 – Buying a home with cash won’t help your credit score. Because you won’t be making monthly payments, your credit score won’t be affected – negatively or positively – at all.
If you’re thinking of purchasing a home with cash, be sure you understand the pros and cons of doing so beforehand.