RE: The Benefits Of Buying A House WITH CASH!
The only place in the world where you can get a loan at a low rate is with a home. Interest is 3-4%.
If you fully mortgage your house 100% and take the money, say the $177,000 you say is average cost. Invest it at 12% you earn $1,770 in interest every month.
Your home mortgage is $877 at todays rate, Figure another $200 a month for taxes and insurance makes your house payment $1077.
By mortgage the house and investing the cash you get 1,770 a month - $1077 mortgage and taxes = FREE house and $693 profit each month you can use for repairs.
As you see, 100% mortgage and ivesting money instead, will pay for your home so you never pay a penny, PLUS you get to save money on taxes with the tax write off, PLUS you get $693 more dollars each month in the bank as opposed to paying all cash. You work hard for your money, now you have to let your money work hard for you.
What makes you a secure and stable 12% pa after taxes and also pays you monthly?
The way I would set it up is $200,000 in the brokerage account. It gets invested in something for 30 years. so the small ups and downs in your investment won't matter. UPRO has returned 36% annually for the last 9 years. but would not work in BEAR market. So you sit out those. The 36% you are making will cover the 1-2 years you make 0% during a BEAR market.
There is also SPY. For the last 20 years and through 2 of histories worst market crashes it has returned 7.2% annually which would more than cover cost of the mortgage and leave $250 month left over.
Now granted, these don't go up every month but if the account was set up to pay the mortgage each month from the accounts balance, there would be no worry. The extra $250 maybe cover taxes so you still come out ahead with the interest tax deduction. The savings on taxes can be invested at the same 7.2% which would come to around $140,000 after 30 years.
All this assumes SPY will average 7.2% over the next 20-30 years as it has always done in the past. No guarantee, but there is also no guarantee the sun will rise in the morning yet most of us live our life as if we will be alive tomorrow. We have faith that history repeats.