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

The simple benefit is that you get a house now as opposed to when you finally get the money together. It also allows your normal rent payment to go into your mortgage and not someone else’s pocket. That way instead of paying your landlord to borrow your dwelling for a time, you pay the bank to own it and can sell it or pass it to your children. You can even sell the house before you pay off the mortgage, so long as you pay off the remaining debt on the loan.