We just bought a house that will be closing in about a month.  We
could pay for it outright without getting a mortgage, out of money
that's currently sitting in money market accounts (it would more or
less clean us out, though).  We also have a substantial amount of
money in mutual funds.

Is paying for the house outright a wise move?  What kind of factors
should we consider in deciding whether or not to get a mortgage?  It
seems foolish to not get a mortgage when rates are apparently hitting
40 year lows, but why should we?  We'd need a jumbo mortgage, so one
thing I was considering is just paying enough to not need a jumbo.

Greetings Stumped1234:

It may assist a Researcher to know your age group, if you have other
debts, college funds for your children, etc., without revealing very
personal information.  There are many factors to consider.  For
instance, you might make a very large down payment and have a small
mortgage payment.  It depends on what percentage you are earning in
money market versus the interest you'd pay out for a mortgage.  If you
money market is 10% and the mortgage is 6%, you might be better with
the mortgage as you'd keep more of your money.

Best regards,
journalist-ga

Stumped1234-ga,

Just a few thoughts here - First, what you are essentially doing is
converting your money market funds to an investment in a home - if
your rate of home appreciation exceeds your money market yields, then
it makes sense - if your rate does not, then take your money market
rate and subtract your mortgage interest from it - this is a slight
oversimplification, but you can always take out a home equity loan
once the house is purchased if you need the cash suddenly.

Hope this helps...

arimathea-ga
Researcher

Hi stumped1234,

I have some Real Estate background and decided to take this question
on, then decided to give my findings to you as Comments because I
think another Researcher may be able to assist you better.

This is a difficult question without knowing more about your
situation.

The first article will help you determine whether all-cash is a wise
move --for you. The conventional wisdom these days is that it is best
to own your home debt-free in your retirement years. Your age is a big
factor. If you are not of retirement age --as you said, it would be
foolish not to use "other peoples money" when rates are at a 40 year
low. You would make more money leaving the money in Mutual Funds and
Money Market Accounts than you would by buying a house all cash and
losing the interest deduction. The house and property will go up in
value either way...

Buying A Home With All Cash - Is this a wise decision?
http://www.touch-point.com/images/dynamic/13_NewsPDF_PDF%20RE%20Color%20Board%20Sample.pdf

Should I Pay Cash for My House? 
http://www.homestore.com/Finance/Barr/QandA/QA04-10-2001.asp

Financial Calculators
http://www.firstnational.com/fnb/tips/calcs/
Scroll to "Home Financing" to access a number of different online
calculators pertaining to financing a home.

~~Cynthia

Search strategy used at Google:
"buy a home with cash" mortgage
"buy a house with cash" mortgage

Thanks very much for all the comments.  We'll probably skip the
mortgage.  Here's an interesting quote I found online:

"Well here is the gist. You could earn say 5% pretax (for simplicity)
by paying down your mortgage. That return is guaranteed. Would you
trade that for an investment which might pay 6%, but also has a change
or a negative return? in other words, how much HIGHER does the
possible return have to be, in
order to induce you to give up the sure thing? For me it is 2-4% for
equities.
Another way to look at your position psychologically is to ask: Would
you take out a mortgage today at 5%, in order to invest in today's
stock market? That
is in essence what you are doing when you continue mortgage debt in
order to maintain other investments."