Last month alone over 800,000 new houses were sold. There’s currently a huge demand for housing in the United States. This can make finding the perfect home a bit challenging.
To improve your odds as a buyer, it’s important to do everything you can to make yourself stand apart from the competition. One thing you can try, if you have the financial means, is paying cash for a home.
But what are the benefits that come with this purchasing method? If you want to learn more, you’re in the right place. In this article, we’ll teach you everything you need to know about buying a house for cash.
Cash Buyers Are More Appealing to Sellers
It’s currently a seller’s market. This means that sellers get their pick of the litter when it comes to selecting buyers. Anything that can make you stand out from other interested parties is valuable.
Luckily, being a cash buyer will likely be a big plus for sellers. Why? Because all too often buyer deals will fall through at the last minute because of issues with financing.
So, by showing that you don’t require financing you’re often a safer bet. Not only that, but cash transactions are also a lot quicker than traditional financing. That translates to less stress for everyone involved.
No Mortgage Payments or Other Fees
Mortgages are expensive. This is because the lender charges high-interest rates in exchange for fronting the money on the new home.
More often than not, the money you pay through interest rates will likely be more than half the amount that the home is worth. For example, if you pay $300,000 for a house, you’ll likely pay over $150,000 in additional interest payments.
When you purchase a home outright with cash, you don’t need to worry about monthly payments. This saves you a massive amount of money.
Lower Closing Costs
Monthly interest payments aren’t the only type of fees that you save by skipping a mortgage. You also avoid a whole host of closing costs.
These are various fees that your lender will charge you. Some of these costs include things like:
- Lender fees
- Application fees
- Loan origination fees
- Discount points
Some lenders will also require you to get a title insurance policy. All of these costs translate to thousands of extra dollars that you owe. When buying a house with cash you avoid all of these lender-related charges.
Faster Closing Time
Most of the time when you go with a mortgage the closing time can take between one and two months. Unfortunately, not everyone has the time to wait around for this.
Often, people have a new job, home, or similar reason for wanting to leave town as soon as possible. Purchasing with cash, on the other hand, usually only takes one to two weeks.
As we mentioned at the start, this makes you a much more attractive buyer to the sellers. But, it also cuts down on the time you need to spend nervously waiting.
You Own the Home
There’s a certain satisfaction that comes with owning a home without the help of a lender. For one thing, you never have to worry about foreclosure from forgetting your payments.
As long as you pay your property taxes, you’ll never have to worry about your living situation. What’s more, you can also use the value in your home as credit for certain loans.
This greatly improves your borrowing power for additional real estate investments, if that’s something you’re interested in.
Should You Get an Appraisal When Paying Cash for a Home?
If you go with a typical mortgage loan, they’ll likely require you to get a home appraisal before proceeding. This is so they know the value of the loan and how much to expect back.
It’s not required for you to get an appraisal if you’re a cash buyer. However, we still recommend that you do it. For one thing, if the appraisal is lower than the asking price, you might be able to negotiate your way to a lower price.
More importantly, you want to make sure that you get your money back when you decide to sell. And without an appraisal, this can be difficult.
Do You Need Homeowner’s Insurance?
Again, it’s not required for cash home buyers. But, that doesn’t mean it’s a good idea to go without. The last thing you want is to lose all of the money you just put into a new house.
So, invest in some good homeowner’s insurance to protect your investment.
How Do You Find a Cash Buyer?
If you’re selling your house, by now you probably want to find a cash buyer. Unfortunately, finding the perfect family with enough funds to purchase real estate can be pretty rare. You can hold out until you find the perfect buyer.
Or, you can take fate into your own hands. Sites like housemax.com put you in touch with experts sellers. They’ll discuss your property with you and immediately give you an offer.
If you like it, then they’ll pay you in cash. These types of cash-for-house services are a great alternative if you don’t want to wait around for the perfect buyer.
Want More Content? Keep Reading
We hope this article helped you learn more about the benefits of paying cash for a home. As you can see, buying a home while avoiding mortgage companies saves you a lot of money.
However, depending on the property, you will need a sizable chunk of cash. Make sure you save up so you can buy the home of your dream.
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