Cash or Mortgage? The Real Math Might Surprise You From Dave & Travis

 

At Dave's Alaska Homes, we always say real estate has a funny way of working out exactly how it’s supposed to. This one’s a great example.

 

Diana first reached out back in May. Her original plan? Sell and possibly head back down south. But after a lot of conversations, showings, and really weighing her options, she realized something important Alaska still felt like home. So we shifted gears and started looking locally. We toured several homes together. Came close on a few. Even wrote an offer on one. But nothing quite felt right.

Then something interesting happened.

A home on Demaree, one she had liked before suddenly came back on the market, just one day before the previous buyer was supposed to close. That’s when timing and preparation matter most. We moved fast, got it under contract, and closed in just 51 days.

Now, if you remember this winter… you know it wasn’t exactly gentle. Major windstorms. Extreme cold. The kind of cold Alaska homes don’t see very often. And like many older homes, a few things showed up after closing. But here’s the part I’m most proud of: We didn’t disappear after the keys were handed over.

We helped Diana get everything handled, connected her with the right people, and made sure she felt taken care of. Because buying a home isn’t just about getting to closing day it’s about what happens after. In the end, she’s exactly where she’s meant to be settled, warm, and happy she stayed in Alaska.

And sometimes… the right home just waits for you to circle back.

 

One of the biggest questions I get from buyers isn’t just “Can I pay cash?”
It’s…

“Should I?”

At first glance, paying cash feels like the smartest move. No mortgage. No lender. No monthly payment. But when you actually run the numbers and think strategically  the answer isn’t always so simple.

Let’s break it down.

Paying cash means no mortgage, no lender, and no monthly payment – but the financial impact goes well beyond convenience.

The most obvious savings comes from interest. For example, on a $400,000 mortgage loan with a 30-year term at around 6.5% interest, you’d pay roughly $510,000 in interest over time. Paying cash avoids that entirely.

Cash buyers also avoid several loan-related costs, including:

• Loan origination and underwriting fees
• Private mortgage insurance (PMI), if putting less than 20% down
• Lender-required appraisals and mortgage processing fees

In competitive markets, cash offers often carry additional value. Faster closings and fewer contingencies can make an offer more attractive to sellers and, in some cases, lead to better negotiating power.

The trade-off? That money becomes tied up in the home. Once your cash is in the property, it’s no longer liquid unless you sell or borrow against it – which brings us to the other side of the equation.

Financing: Leverage, Liquidity, and Flexibility

Financing a home means paying interest and loan fees, but it also comes with benefits that are often overlooked. With financing, you keep more cash available. For example, on a $500,000 home with 20% down, you’re putting down $100,000 and borrowing the rest – instead of tying up half a million dollars all at once. That remaining cash can be used for investments, renovations, or as a financial cushion. Even modest returns on that money can help offset some of the interest paid on the loan over time.

There are also two important long-term advantages to consider:

• Inflation protection: With a fixed-rate mortgage, your payment stays the same while inflation slowly reduces the real cost of those payments over time.
• Potential tax benefits: Mortgage interest may be tax-deductible, depending on your situation, which can lower the effective cost of borrowing.

Financing also spreads risk. Rather than concentrating all your capital in one asset, you maintain flexibility  something many buyers value just as much as interest savings.

The Real Decision: Opportunity Cost

The real decision isn’t just “cash versus mortgage.” It’s about opportunity cost  what your money could be doing if it weren’t locked into your home. Paying cash offers certainty and peace of mind. Financing offers flexibility and optionality. Neither choice is automatically better they simply serve different priorities.

Some buyers prefer the comfort of owning their home outright. Others are comfortable using a mortgage as a tool, especially when it supports a broader financial plan.

This is exactly the kind of conversation I help buyers navigate every day. If you’re weighing your options and want to understand how different purchase strategies play out in real market conditions  not just on paper. I’m always happy to talk it through with you.

 

You may have heard homeowners today have a lot of equity built up. But what does that really mean? Let’s break it down.  Because your equity isn’t just a number, it’s a powerful asset that can help you take your next big step in life.

Here’s how it works. As you pay down your loan and home prices rise through the years, the share of your home that you own free and clear grows. That’s your equity.

And according to data from the Census and ATTOM, two-thirds of homeowners have a substantial amount of it today.

39% own their home outright without owing anything on it. And another 27% have at least 50% equity in their homes (see chart below):

That’s a big deal. And just in case you’re wondering how that translates into real dollars, Cotality says the typical homeowner has almost $300k in equity today. That’s six figures.

And whether you have that much, even more, or a bit less, here are a few examples of how you can use it.

Ways You Could Use Your Home Equity

1. Move Into a Home That Better Fits Your Life
Your needs change over time. Maybe your home is starting to feel cramped, or maybe you have more space than you need now that your adult children have moved out. Either way, you can use your equity as a down payment on a home that’s a better fit for what you need now, and going forward. You may even have enough equity to buy your next house in cash.

2. Upgrade Your Current Home
And if you’re not ready to move just yet, you could reinvest it in your current home instead. Renovations like a kitchen refresh or updated bathrooms could add value when it’s time to sell down the line. Just be sure to talk to a real estate agent before you tackle your project list, so you can prioritize updates that’ll give you the biggest return later on.

3. Fund a Major Life Goal
Equity can also help fund your life goals – whether it’s starting a business, saving for retirement, covering education costs, or helping out someone you love. Some homeowners are even passing down some of that wealth to help fund a loved one's down payment on a home.

4. Avoid Foreclosure in Tough Times
If you’re struggling with payments, your equity can also be a lifeline. Many homeowners who hit financial hardships can sell their homes and walk away with money in their pockets instead of facing foreclosure. If that’s something on your mind, talk to a real estate expert about your options and how your equity can help.

Your Next Steps
If you’re interested in using your equity for one of the reasons above, here’s what to do:

That means, as a general rule of thumb, you want to maintain at least 20% equity in your home as a financial cushion something many homeowners didn’t know back in the crash of 2008.

The good news is, according to the Intercontinental Exchange, most of today’s equity meets that guideline:
“As of Q4, mortgage holders have $17.3T in home equity, including $11.2T in tappable equity ‒ accessible via cash-out refinances or home equity lines while maintaining 20% equity in the property . . . ”

Bottom Line
Your home equity is one of the biggest financial assets you have. Whether you’re thinking about moving, remodeling, or working toward a big goal, it’s worth exploring your options. Reach out to a financial advisor to learn more.

What’s one goal you have that you'd go after right now, if you had the funds for it?