Eli5<- what are the pros/cons of borrowing money from the bank vs paying cash when buying a house?

Question

And why would it ever be a good idea to borrow if you can pay cash and pay no interest to the bank?

In: 18

Answer 1

I paid cash for my current car. It was “only” $27,000, and it hurt to let go of such a big chunk all at once. But I was unemployed, I had that much cash available, and I didn’t want to have a bill hanging over my head for the next 5 years or pay the bank a bunch of extra money because of the interest I owed them. In that situation, paying a single lump sum made the most sense to me.

For every other car (and house) I’ve owned, I paid in installments over years. Though I do try to pay early and cut down the amount of interest I have to pay… I paid off my 30-year mortgage in 21 years.