Should You Buy A Home With Cash?

If you are thinking about buying a new home, you may have heard about some of the advantages of buying a home outright with cash. According to research by the National Association of Realtors®, almost a third of all residential sales are cash transactions and more than 70% of properties bought by investors and international buyers are cash transactions as well. So, you may be wondering, what exactly are the advantages to buying a home with cash and how can I make a cash offer?

Preparing yourself to be able to make a cash offer on a home requires patience and self-control. Follow these tips to increase your chances of being able to purchase a home with cash:

  • Set aside any unexpected money that comes in (inheritances, bonuses from work, etc.).

  • Lock your money in a long-term CD to earn interest.

  • Look for homes that you can afford with the money you have (the goal is to not have to borrow).

  • Homes outside of the city limits are likely to be cheaper-look there.

  • Manage your spending habits; don’t make impulse purchases.

  • Ask your family and friends for support and help to keep you spending smart.

Here are just some of the advantages to purchasing a property with cash:

  1. Most sellers favor buyers who can offer cash payment. Sellers don’t have to worry about a cash buyer being approved for loans, so it’s a very reliable choice for the seller. Plus, a cash transaction means a quicker and smoother sale. So, cash buyers have greater negotiating power on price, closing time, repairs, and more.

  2. Some sellers will discount the cost of the property if the buyer pays in full, upfront, with cash.

  3. When using cash, and not a loan, the home-buying process is quickened and becomes much easier for both parties. Without loans, there are no stacks of paperwork to fill out and you don’t run the risk of being delayed for approval.

  4. Cash buyers can save money on closing costs, bank appraisals, mortgage applications and fees, title insurance, and more.

  5. There is no risk of loan denial with cash purchases.

  6. Mortgage interest on a typical 30-year loan can double or even triple the original purchase price of a home. Cash buyers don’t have to pay interest on any loans, so they end up paying much less for their homes in the long run.

  7. Cash buyers are able to save valuable time by eliminating the need to search for the optimal lender (which can be hard to find) and gather the necessary documents for the lender.

  8. Cash buyers have a better sense of security about their home. Paying in full and upfront eliminates the chance of losing your home if you can’t afford to repay mortgage loans. Losing a job, becoming injured, or facing other hardships doesn’t affect the cash buyer’s sense of security-no matter what the circumstances, there is never the risk of losing the home to foreclosure.

  9. Cash buyers gain full, immediate, excellent equity in their home. In the case of any type of financial emergency, homeowners can draw on that equity for quick cash.

  10. Cash buyers are able to avoid mortgage applications, which can often prevent a buyer from being able to afford the home. This can happen when a low appraisal of the home causes the lender to reduce the loan amount offer to the buyer, making it impossible for the buyer to afford the home.

When a buyer purchases a home up front with cash, both they and the seller benefit. Financially and emotionally, cash transactions are beneficial to everyone involved in the transaction. Cash transactions save time and money and allow homeowners to be more secure in their purchase. Cash transactions can, in many cases, take away a lot of the uncertainty associated with buying and selling a home.

For more information on the advantages of buying a home with cash, read the original article from Realtor.com here.

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One thought on “Should You Buy A Home With Cash?

  1. Pingback: Is It Smart To Buy A Home In A Fast Paced Market? | The Brand Group, OH-IO Homes

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