[mmctrab]

The main decision as far as paying cash or taking out a mortgage relates to mortgage rates, and what kind of a return you can get investing money in a fairly conservative manner. Right now a 30 fixed mortgage is about 5.9%, and the mortgage interest is deductable so you'll probably get back about a third of it when you file your income taxes. The end result is that your mortgage rate is really about (.66)(5.9) or about 3.9%.

Let's say you have $120,000 cash and are looking at a $120,000 house. You'd be better off putting 20% down, taking a mortgage, and investing the remainder because the cash that you invest, even if you're very conservative with it, will grow at greater than your mortgage rate. Now, if mortgage rates were say 12%, like they were when my parents bought their first home, then buying the house for cash would make a lot more sense.