About half of home buyers these days are paying cash. While being able to pay cash is an effective strategy in successful negotiating to buy since a seller will usually accept a cash offer over one with a mortgage contingency, take a closer second look at the long-term financial effects.
Regardless of the offer strategy, the savy buyer should still consult their financial adviser either before or after closing on the property to consider the advantages of a home mortgage at the historically low current interest rates. If you are buying a home for $500,000 and pay 4% mortgage interest and are able to invest your cash with an average return of 6% a year over the first 10 years you own the home, you will earn 2% above what you are paying. While this may not seem to be substantial, consider that $10,000 a year over the 10 years earns $100,000. You are still enjoying your $500,000 home and have the more flexible liquidity and potential profit if you invest the $500,000 cash.