There are many reasons you may consider if you are looking to buy a home with cash. If you’ve recently sold your home, you might find that you have enough cash to buy a home without a mortgage, saving yourself money on interest. Maybe you’re an investor who is looking to flip a house and you have the capital to buy the home in cash. Perhaps you want to make a stronger offer than your competitors.
Whatever your reason is for purchasing a cash home, you should know that the process is slightly different than buying a home through a mortgage. Let’s take a look at the home cash buyer process.
Why Should you Buy a Home with Cash?
There are some benefits if you are in a position to buy a home with cash, but there might also be benefits to carrying a mortgage. You should take the time to weigh the pros and cons of each before assuming that cash is king. Obviously, if you buy a home in cash, you will avoid both being in debt and incurring interest charges. Without a mortgage, you’ll also save on fees charged by lenders. You won’t be required to make mortgage payments each month, so if you fall into financial hardships down the line, you won’t default on your mortgage.
That being said, a mortgage can offer tax benefits. Your interest payments are actually deductible when it comes to your taxable income, which can save you money as well. Plus, you’ll have more cash available to you in your bank account if you were to need it. This is especially important when you’re looking at selling your home. Will you have enough for a down payment on a new one? If you decide to buy in cash, make sure you have plenty of money left over for emergencies or unexpected costs.
Steps to Buying a House with Cash
- Sort your cash out – First thing, you need to see exactly how much cash you can offer without putting yourself in a bad situation. If your cash is in multiple places, you’ll want to get it all together in one place. Then you’ll need to obtain proof of funds from your bank. Sellers will need to see that you really have the cash available to purchase their home.
- Choose the right house – This step will vary a lot depending on what you’re looking for with your home purchase. Investors might be looking for homes that are specifically marketed as-is. Homeowners looking to sell their homes quickly without repairs are usually open to cash offers. If you’re just buying a home for yourself, you will proceed as usual. Buying with cash shouldn’t affect what type of home you’re looking for.
- Make an Offer – Here is where your cash advantage comes in, especially in a seller’s market. Cash offers often are more competitive than traditional offers, especially if you already have proof of funds. Make sure you’re working with a reputable real estate agent so they can include any contingencies necessary to protect you during the negotiation process. You’ll need to deliver your earnest money if any was included in the negotiations.
- Cover all your bases – You won’t need to get an inspection if you’re buying the house as-is, but if you’re buying a house to live in, it’s a good idea to get an inspection just as you would if you were buying a home with a mortgage. You might also consider having the house professionally appraised and purchasing title insurance.
- Closing day – Typically, you’ll have a title or escrow company handle the closing. Make sure to do one final walk-through. Then you will need a check with the final amount owed on the house and then the house is yours.
Buying A Home With Cash
The closing process when you buy a home with cash is often much faster than when you’re purchasing with a mortgage because you’re not having to deal with the banks. You also have your choice of title companies, appraisers, and other services since they won’t be dictated by your lender. The process also tends to be more simple as well.
Consider Consulting With Professionals
Seeing as this will likely be the largest cash purchase of your life, it’s a great idea to consult with professionals along the way. For starters, you can meet with a financial advisor to go over your finances and make sure that buying a home with cash is the best choice for you. Everyone has a unique situation and they can help you make an informed decision.
When shopping for your home, it’s a good idea to work with a real estate agent who has experience in cash offers. With their experience, they will be able to negotiate on your behalf and get you the best price for a cash purchase, as well as guide you through the process.
Throughout the whole buying experience, you can bring in other professionals to make sure that everything goes smoothly. From title research to appraisals to land surveys, all of these should be handled by someone who is familiar with the work. You don’t want to encounter any problems down the road that may cost you money when you go to sell your home.
Cash Buying May Be Perfect For You
If you have the means to buy your home outright in cash, it could potentially save you time and money, not to mention the headache of having a mortgage. Weigh the pros and cons, consult the right professionals, and make an educated decision for you.