Do the Rich Pay Cash For Their Homes?

Quick question … which is savvier, paying cash for your home or getting a mortgage?

Conventional wisdom tells us that it is smarter to pay cash for our homes because it saves having to pay interest to a mortgage company or lender.

The truth of the matter is that the wealthy seem to operate against this conventional wisdom.

The wealthy do not pay cash for their homes, even though they certainly can afford to. Instead, the wealthy get big mortgages and don’t pay them down or pay them off.

It’s true ... These folks have lots of liquid assets. Most can pay cash for the real estate they buy. But they don’t.

They know there is a better way. They know that mortgage money is the cheapest form of borrowing and that the added tax benefits can make it an excellent financial strategy.

The wealthy also know that it is much easier to access your money when your equity isn’t locked into your home.

When you understand why they don’t and what they do that makes their net worth skyrocket year after year, you too can put their strategies and tactics to increase your own net worth.

-adapted from an article by Marian Snow, author, "Stop Sitting on Your Assets"
Her site: http://www.stopsittingonyourassets.com
Her blog: http://mariansnow.typepad.com/assets