To make the most sense of your alternatives, you need to know what you're trying to achieve. In other words, have a financial game plan. Paying cash for a property may make sense if you are trying to avoid paying loan fees and settlement costs. These include appraisal fees, discount points, and origination fees. You need to evaluate your personal circumstances before purchasing for cash.
Most financial planners suggest at least six months of financial padding in liquid assets.
Paying cash for a property may drastically limit your liquidity. This can be especially critical if you'll send kids to college soon or need to assist an elderly relative with living costs. If you are close to retirement, buying a home for cash will cut monthly mortgage expenses. Just make sure you have enough income from other sources to live comfortably, including paying rising property taxes, insurance, and maintenance on the home. It may make more sense to use your cash to pay off non-deductible credit obligations than to put cash into a home.