I Didn’t Plan to Ever Get A Mortgage Again. Here’s Why I Changed My Mind

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When I decided to increase my housing budget, it became necessary to get a mortgage. Read on to learn why I didn’t want to spend the needed money in cash. 

Getting a mortgage loan can be a huge pain. It takes a lot of time to get all of the documents together that mortgage lenders require — especially since I am self-employed. There are also a lot of costs associated with borrowing to buy a home, including mortgage origination fees and required appraisals, which can cost a few hundred dollars.

Because I really dislike getting home loans, I vowed once not to ever get another mortgage loan. I’ve recently changed my mind, though, and there’s a good reason why.

Here’s why I had a change of heart about getting another mortgage

There’s a simple reason why I changed my mind about whether to get another mortgage loan. Here’s what happened: I realized that I had to sell one of my current homes that was paid for outright, and I really wanted to move to a more expensive home, so the proceeds of my current sale wouldn’t cover the entirety of the new purchase.

See, I was living in a house that turned out to have terrible traffic problems and it was making my family miserable. We essentially felt like we were prisoners who were trapped in the home because driving anywhere took far longer than it should (an especially big problem with a young child who hates being in her car seat and screams the whole time we’re driving).

We decided we needed to relocate, and after an exhaustive search of homes around the area we wanted to be in, we realized we were going to have to upgrade and buy a more expensive house. And we could not afford to do that with the proceeds from the sale of our current home.

While the proceeds from the sale of our existing house would give me a generous down payment, the only way I would be able to avoid getting another mortgage would be to sell a ton of my investments. And I simply wasn’t willing to do that.

Since moving was something we considered to be necessary and I didn’t have the cash to cover the cost of a new home, getting a mortgage seemed like the best option.

Why I didn’t sell my investments to buy a new house

I could have sold some of my investments to give me the money to purchase my new home, or at least to put a much larger down payment on it. But, it doesn’t make financial sense for me to do that.

Even at today’s mortgage rates, which are higher than I’d like them to be, I can still get a better return on my money by leaving it invested in the S&P 500 than I would if I pulled the cash out of my brokerage firm and sunk it into my home. I don’t want to tie up too much money in a house either since it’s not a liquid asset (it takes time to sell and there’s no guarantee I’d get my asking price).

The downsides of not getting a mortgage outweighed the upsides, as they often do for home buyers, which is why even people who could afford to do so often don’t pay cash for houses. So, even though getting a mortgage is a huge pain, it’s worth it for me — and for most home buyers — because borrowing to buy a home makes sense due to the low return on investment on saved interest.

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