Buying a House in Cash: is it Right For You?
Buying a house in cash is the most effective way to have a successful real estate deal. It saves you from ever facing a foreclosure situation. In addition, you eliminate monthly interest charges, penalties and amortization payments.
Purchasing a home in cash is not for everyone. Evaluate your financial situation by using the following checklist:
- Research. Check the range of home prices for sale in the area where you want to live. Determine the price range that your budget will allow. This will help you determine in advance the amount of cash that you should raise for the purchase. It will also help you forecast related expenses and budget for the coming months.
- Check your income, liabilities, obligations, and your assets before you use cash to buy a house. Prepare all the necessary documents needed to prove your financial stability.
- Analyze your expenses as it may affect the budget allotted for the home buying. It could also affect you and your family’s lifestyle, as you may need to cut back on spending.
After a thorough evaluation and you decide to move ahead in a cash purchase, the following will happen:
- Make an offer on a home you can afford. This offer should be made in a way that the seller would want to engage in negotiations with you. Because this is a cash offer, it may be easier for you to close the deal as long as you made your offer price fair.
- Enlist the help of experts; they will work in your best interest. Real estate professionals will help you understand the legality of the deal and terms and conditions of the transaction. An appraiser could also guide you in assessing the price you may want to offer and the price range below your offer that you could accept in a way that you will not suffer a loss.
- Arrange the closing. The closing time should be set for the benefit of both buyer and seller. The buyer, buyer’s agent, seller and seller’s agent should be all present during the closing time. Prepare checks and all the necessary documents.
If it’s a viable option, a homeowner who purchased in cash can enjoy many benefits. Among these are: easy to buy and sell, no mortgage payments or rent payments, sense of security and ownership, available equity and less market fluctuation concerns.
Despite the advantages, buying a house in cash has some downsides. These include loss of liquidity, lack of leverage and no tax advantage. This is why homebuyers should be very careful in their decision.
A cash purchase may be the optimal way to own a house. It is becoming more common as it offers greater benefits than purchasing a house with mortgage obligations. However, it is a great financial responsibility and it should be planned and executed thoroughly.