Paying for property with cash?
I am asking this for a friend -- if you wanted to buy a piece of property for $200K and you had the cash, would you pay for it outright, take a mortgage for all of it (minus say 20% down), or take a smaller mortgage and pay say half or more out of your cash? They already have a pretty good mix of stocks and bonds and are fully funding their IRAs and 401Ks so this is not their only money. It is pretty much all of their cash though - they won't have much by way of emergency savings if they use it all to buy the house. The money is coming out of equity in their current home - they are moving from a very expensive area to a much cheaper one.
I'm asking here because they've gotten very different opinions. Their stockbroker tells them to invest the money in stocks and get a mortgage because it is better not to have all your money tied up in real estate. I say duh, of course that's what the stockbroker says because he wants your commission. I was running the mortgage amortization calculator and showed them that on a 30 year mortgage, they'll end up paying about 200K just in *interest* - on top of the 200K selling price. I think they should just pay cash. What do you think?