Can I Buy a Home With Just Cash

 In Blog, Real Estate Questions

Is it possible to buy a home with just cash? There’s a lot of confusion around the ins and outs of the home buying process, especially for first-time buyers. While the vast majority of homebuyers do choose to buy a home with a mortgage, it is possible to buy a home with just cash.

 

There’s a lot to consider before buying a home with cash, however. There are a lot of differences between buying a home with cash and using a mortgage, and they might surprise you. Let’s take a closer look at why you might buy a home with just cash as well as how that differs from a traditional mortgage.

 

 

Man with cash in his hand

 

Why Pay Cash For Your House?

There’s a big stigma around carrying any type of debt today. Though we often don’t think of it in this way, a mortgage is a form of debt, and it’s something you’re obligated to pay off with additional interest. When you pay cash for a home, you eliminate the need to pay interest on the loan and any closing costs.

 

Because you don’t need to go through a lender to get approved, there are significantly fewer fees. There are no mortgage origination fees, appraisal fees, or any other lender fees that really add up. This means big savings when it’s time to close on the house.

 

Another perk of paying just cash for your home is that it’s more attractive to sellers. If you’re bidding on a home, a seller is more likely to take a cash offer over a mortgage. Why? It’s simply more stable. The buyer with a mortgage might have their financing denied for any number of reasons. When you purchase a home with cash, the process is also a lot faster which is a reason it’s so attractive to home sellers.

 

A home that’s purchased with cash is also treated differently than one owned through a mortgage. Because the home isn’t leveraged by a lender, it’s much easier to sell, even if it’s sold at a loss. Ultimately, there are a lot of perks to buying a home with just cash.

 

 

How Is It Different From Financing?

How is buying a home with cash different from financing a home with a mortgage? Aside from the reasons listed above, there are some reasons you might still consider financing. Even if you can pay cash for a home, tying up a lot of cash in real estate isn’t always a good investment.

 

For instance, if you dish out so much cash that you’re not left with much to put towards renovations or repairs, you could find yourself in a tricky financial situation. Owning a home with a mortgage can also be a big boost to your credit score, and this could help you down the line if you need to obtain a home-equity loan.

 

Simply put, when a buyer exclusively uses cash, they need to be careful. They could leave themselves without much liquidity if they need to purchase another house in the future or if they aren’t aware of tax implications. Mortgage interest payments are tax-deductible, and this might be something else to consider. You could end up saving less money than you would have earned if you had taken out a mortgage in the first place.

 

 

Should You Buy a Home With Cash?

In general, you want to opt for the option that gets you the best value for your money. If paying cash for the full purchase is something that makes sense for your financial status and you’ve considered all options, this could be a smart move that saves you big on closing costs and interest.

 

If you plan to live in the home for a long time, you almost always will save if you buy a home with cash as opposed to a mortgage. Because you won’t be paying interest over the life of the loan, you get to keep that money for yourself. However, that alone isn’t always reason enough to choose to buy a home with just cash over a mortgage.

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