When buying a home, buyers often look for anything that can give them a leg up on their competition. One-way people are doing this is by buying their home in all cash. While paying in cash can make it more likely that the seller will accept your offer, it’s not for everyone. Here are some pros and cons to buying a home in all cash, and tips to help you decide what is best for you.
Sellers usually favor it
Sellers often favor an offer that is all cash. This is because they know that whether you get a loan or not you are still planning on buying the home. Sometimes the seller may even sell the house for less if you plan to pay all cash. Another reason sellers tend to favor all-cash buyers is because the selling process goes a lot faster. Without having to deal with the paperwork of getting a loan there isn’t a long wait process.
Saves you money
Not only is paying in all cash easier for the seller but it’s also easier for the buyer. When paying in all cash you save money on closing costs, title insurance, bank appraisals, mortgage applications, and other expenses. Also without a loan, there isn’t any interest, which can add up into being a lot of extra money.
Leads to less stress
The longer your buying process takes the more stress you have to go through. Buying a house with all cash eliminates that stress. One of the main stresses you get to miss out on is home appraisals. If you buy a home using a loan you need to get the lender to come out and determine the home’s worth. With cash, you get to skip that step and avoid the stress of the appraisal being low. Owning your house as soon as you sign the contract gives buyers a sense of security, especially because you no longer have to worry about foreclosures.
You could have invested
If you have enough money to buy a home, you probably have enough money to invest. Investing can take the money you would have used to buy a home and grow it. You can invest in the stock market or mutual funds and make a larger return.
You can end up house poor
House poor is when you bought a house with most of your money and now can’t afford any additional expenses. If you are going to buy a house in all cash, you want to make sure you still have liquidity. You never know what is going to happen and you want to have enough money on hand in case anything arises. It is suggested to have enough money that you could live off of for a couple months in case you lose your income.
If you still don’t know if buying in all cash is right for you, talk to a real estate agent you trust like Joe Lewkowicz. Joe is always here for you and will look out for you and your best interest.