* The wealth creation is how much the net present value (NPV) the
plan can create.
Buying with all cash usually creates no wealth at the moment you buy the house because
we assume the house price is fair so the NPV is zero. However, using a mortgage may
create higher or lower
wealth than buying with all cash, depending on your opportunity cost of using that
cash. When your PMI is low and your investment yield is higher than the
mortgage rate (APR),
you can generate more investment income than the mortgage interest payment, bringing you
more cash inflow in the long term. In financial terms, professionally, your NPV of
utilizing a mortgage will be higher than the NPV of buying with all cash.
** The winner plan you may consider is the one creating the highest wealth as it
brings a better financial outlook in the long term.