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There has long been a great deal of debate among personal finance experts about when to use a mortgage to buy a home and when to use cash. Radio talk personalities, like Dave Ramsey, generally recommend paying cash whenever it is at all feasible to do so. However, there are some real plusses and minuses to using cash to purchase a home. And even for those who have the cash to cover the full purchase of a house, doing so may not always be the best option.

Paying cash has many advantages

Paying cash for a home has some significant advantages. One of the first is that it can make the difference between closing sales and being shut out of competitive markets. In hot real estate markets, sellers have little interest in waiting for a month or longer to see if a particular buyer gets approved for a mortgage while many better-qualified buyers slip through the cracks. In this case, cash is king.

Paying cash can also save massively on fees and costs. The typical mortgage takes thousands of dollars to close. These fees are usually rolled into the mortgage itself, but avoiding them is still preferable. The real savings, however, come from avoiding all of the interest payments, which on a 30-year mortgage can add up to far more than the principal amount. All told, paying cash rather than the equivalent mortgage is equivalent to buying an investment that earns the interest rate on the mortgage amount. That is, paying $500,000 in cash where the mortgage is 7 percent is like a $500,000 bond that pays 7 percent annually, for 30 years.

Cash also sharply limits risk as it becomes both far likelier that the equity will grow and the risk of repossession is removed entirely. For these reasons, cash is king.

Even with all their drawbacks, mortgages can still be a better option

There is one hugely compelling reason that a buyer might want to get a mortgage: They just don’t have sufficient cash to afford the home otherwise reasonably. This is of particular concern for young people who want to form families. Waiting to save enough cash to buy a home before starting a family could easily mean missing their prime fertility window.

This isn’t just a problem for people with no cash. Those who may even have enough funds to pay for a home may be left with such stretched finances that taking out a mortgage would be the far safer option.