Should You Buy A Home With Cash If You Can?
Posted on: 26 March 2021
Are you looking to buy a home and have enough money saved up to make a cash offer? If so, it helps to know the following things about this so you can know the advantages and disadvantages.
Cash Offers Close Faster
One of the biggest advantages of buying a home with cash is that your home purchase is not contingent on securing financing. When you need to get a mortgage, the bank needs to approve the sale based on the condition of the property, perform underwriting to approve you for the mortgage, and even look at the home inspection report. This whole process slows down the home buying timeline, and can easily stretch it out to 30 or 60 days in some situations.
A cash offer means that you do not need to secure financing, so you can close on the home in a matter of days, not months. This can make it appealing to home sellers that have already bought their next home and moved into it. A shorter time to close on their home will result in fewer days of paying for taxes and utilities on the home they are not using.
When you are dealing with an incredibly competitive seller's market right now, know that a cash offer can be a deciding factor that allows you to have your offer accepted. Sellers may be tired of dealing with buyers that have financing fall through or simply want to sell their home as fast as possible.
Cash Offers Tie Up Your Money For The Length Of The Mortgage
One reason that many people do not make a cash offer, even if they have the cash on hand, is because it ties up all that money for the entire length of the mortgage. With a home mortgage being one of the cheapest ways to borrow money these days with interest rates at record lows, you may decide to do something else with that money instead.
For example, if you are able to invest the money and make a higher rate of return than your interest rate on a mortgage, it would be more advantageous to take that cash and invest it. While there is risk involved with investing, because you can always lose money on a bad investment, you may find it very easy to make more than the amount of interest that you will be paying every year toward your mortgage. You can then use your earnings to pay off your mortgage early, getting the best of both worlds.
For more information, contact a company like 123 Cash Offer.
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