Here are some of the advantages of buying a house with cash that you may want to consider. If you’re in a competitive market, being a cash buyer can give you a leg up against buyers who plan to finance their purchase. Sellers often prefer to work with cash buyers if they can because they don’t have to worry about a buyer’s financing falling through at the last minute, as can happen with mortgages if the buyer isn’t able to get approval. Plus, because cash-only transactions typically happen faster, sellers who are eager to close might be more willing to negotiate with a cash buyer than they would a borrower with a mortgage.Cash Home Buyers Are Often More Attractive To Sellers
No Mortgage Payments, Interest Or Other Fees
Not having a monthly housing payment is a pretty great perk. Paying in cash means you get to skip the mortgage process and all the costs and fees that come with it, including interest rates or mortgage insurance.
Skipping out on interest can save you a lot of money in the long run. Say, for example, you take out a 30-year loan for $300,000 to buy a home with an interest rate of 3.5%.
Once the 30 years are up and you’ve paid back the $300,000 principal, you’ll have spent an additional $184,968 on interest. If you pay in cash, that’s money you get to keep in your wallet.
Avoiding a monthly mortgage payment can be especially beneficial if you’re using cash to buy a second home or investment property; this means no extra mortgage payment to worry about each month and a larger profit margin on rental income.
Lower Closing Costs
When you get a mortgage, your lender will charge you for certain services that add to the amount you’ll owe at closing. This includes things like lender fees, an application fee, loan origination fees or discount points. You may also have other costs related to the loan or home purchase that are required by the lender, such as a lender’s title insurance policy.
When you pay in cash, you won’t have to deal with lender-related closing costs, which translates to lower closing costs for you.
Faster Closing
From start to finish, the closing process when you purchase a home with a mortgage can take over a month. By contrast, when you buy with cash, it’s possible to close on a home in as little as a week or two.
When you aren’t getting a mortgage to buy a home, you don’t have to wait for the lender to approve, underwrite and process your loan, significantly cutting down on the amount of time you’ll spend waiting to close.
Simpler Closing Process
Barring any unforeseen issues, the closing process will also likely be a little easier on you when you pay with cash, since you won’t be responsible for keeping track of all the documentation borrowers need to send to their mortgage lenders.
Your Home Is Yours
When you own your home outright, you don’t have to worry about losing your home (as long as you make payments on other things that could put your home at risk if left unpaid, such as your property taxes).
The peace of mind of knowing you’ll always have a roof over your head can be one of the biggest and most consequential benefits of buying a home with cash. And you can always transition into a home loan through delayed financing if you decide you need access to the equity in your home immediately.
