Buying a home with cash is not just for developers who want to buy, fix, and flip a home for profit. In fact, there are several good reasons to buy a home outright with cash if you can. Cash deals benefit you and the buyer by streamlining the process and lowering the risks of financing.

Less Expensive in the Long Run

Cash deals carry far fewer and much lower costs than mortgage financing, which carry interest with payments. If, for example, you took out a mortgage for $100,000, you could by the end of the loan's life wind up paying out $250,000. Cash deals, of course, carry no interest. You write the check, you get the keys, and your house is yours.

A Streamlined Process

Getting a mortgage can be a tricky matter. Some buyers, for example, have excellent credit and a healthy savings account, but do not qualify for a mortgage. This is especially tricky if you're self-employed ‒‒ most lenders require two or more years of ample self-employed tax returns to qualify for a mortgage loan.

Also keep in mind that many lenders will not issue mortgages for less than $45,000 or $50,000. In markets such as North Texas, where plenty of good homes in good neighborhoods are on the market in the $30,000 to $40,000 range, a cash deal is a far easier way for you to net your dream home. Cash deals also save you the time and effort of finding the right lender with the right terms.

Sellers Prefer Cash Buyers

On the other side of the table, sellers generally prefer cash buyers. After all, if you're looking to sell your home, would you rather sweat out waiting for the buyer's financing (which could fall through at any of several stages in the mortgage-getting process) to be approved, or would you want a sure thing? Even if a buyer is prequalified, a bank can deny the mortgage later, costing the seller not just money but in some cases months of time, forcing sellers back to square one.

Buying with all cash gives a buyer greater negotiating power with motivated sellers. Many times sellers are willing to sell for less in exchange for the peace of mind of knowing the deal is done, meaning that cash buyers can often walk away with a great deal. Speaking of which ….

Peace of Mind

The ability to buy a home outright brings on a sense of relief like nothing else. When you pay cash for a home, you have no outstanding mortgage loan payments or rent to worry about. Plus, if you pay cash, you now have equity in your home, meaning you could borrow against it if an emergency arises.

Affording It

Buying with cash is not as out of reach as you think. Any cash deal starts with savings, from your paycheck or from windfalls such as a lottery win or an inheritance. And while saving money takes time, prudent savings can add up quickly. Look for homes in areas removed from dense cities, where property values are typically lower and the pace of living is easier. You can also look for foreclosed properties offered by banks that own the property, or through the federal HUD program. Many of these houses will need heavy repairs, but it still may be worth it to own your home outright and fix it up as you go.

Posted by Richard Soto on
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