Explaining how mortgage money works is a great way to alleviate any stress a buyer might be feeling during the home-buying process.

Sticker shock is one of the biggest reasons why people are anxious when buying a home. However, once they know how mortgage money works, they likely realize that their buying power is stronger than they thought.

All because they’re using other people’s money.

Key takeaways

  • Trying to save to purchase a home with cash takes much longer
  • Mortgages free up cash for repairs and renovations
  • There is such a thing as good debt

Financing a Home Purchase with a Mortgage isn’t as Scary as you Think

When first-time homebuyers hear the word “mortgage,” they immediately think about the debt that comes with it. And since smart money says today’s first-time homebuyer is probably carrying substantial debt already (credit cards, student loans, car loan, etc.), adding more to the pile isn’t that appealing.

Naturally, purchasing a home outright with cash, or at least plunking down a huge down payment to avoid as much mortgage debt as possible, can seem like the best choice.

However, there’s a lot more to think about when deciding to purchase a home with cash versus a mortgage loan. And while it would feel really good to own the home outright, there are some long-term detriments to not seeking mortgage financing. Continue reading