Making the decision to purchase a custom home is the first step in the home buying process. The second step is whether paying cash or financing is the best option. There are advantages and disadvantages to both.

All homebuyers are different, and what is best for one may not be best for you. We detail some of the pros and cons to paying cash for a home:

Pro: Security

  • Purchasing your custom home with cash means that you don’t have to worry about a monthly mortgage payment. Which serves as an extra level of security if your financial circumstances change.

Con: Less Money to Invest

  • If you do pay cash for your home, then you have less money to invest elsewhere. So, if the returns on the investments outperform the interest on the mortgage, then you lose out.

Con: Illiquidity

  • If a disaster happens, and you need cash quickly, the only way to do so is to borrow against your home or sell it. To avoid this, if you do pay cash, immediately open a home equity line. This ensures that in a state of emergency, you won’t have to make the tough decision to borrow or sell.

Pro/Con: Tax Deduction

  • This is a big benefit for many homeowners wanting to pay cash for their home. However, many times that deduction isn’t as large as you think.

To see more advice from financial advisors, you can read the rest of’s article here.

For some, the peace of mind of paying cash, far outweighs the risk of less money to invest or illiquidity. For others, having money to invest in addition to owning their home is the only security they need.

Whether you choose to pay cash or finance your home is a decision that will have to be what’s best for you and your current financial situation. Regardless, a home is an investment, so ensure you get what you want by building your Middle Tennessee custom home with Arthur Rutenburg Homes.