Are you planning to purchase your first home? Sellers will always love it when you buy their property using a cash offer. It makes the entire process faster, easier, and saves on the total expenses of selling a house.
However, as a home buyer, is a cash offer for a house an ideal choice? Would you instead buy a house using a mortgage loan rather than cash? Today, we’re going to find out.
Buying a house can be a bit overwhelming. This is particularly true when it comes to the payment option. Basically, you’ve got two options to choose from. Should you pay with a mortgage or pay with cash? Luckily, we’re here to help.
If you’re searching for Fayette County TN homes for sale, here are the pros and cons of using a cash offer:
Cash offers come with a lot of advantages to both the buyer and seller. Here are a couple of pros of accepting a cash offer on the property:
- You can get a discount from the seller if you use a cash offer.
- The house belongs to you immediately. You won’t lose it.
- You can tap into home equity if you need to.
- It gets rid of the stress associated with mortgage payments.
- Avoid the hassle of getting a mortgage.
- It lowers all the documentation and paperwork.
- Cash offers for houses save money since you won’t have to pay for interest.
- You won’t have to go through any credit check since you aren’t dealing with lenders.
- It is a faster process.
- You can quickly find a house since sellers prefer cash offers.
- Sellers are more confident with buyers offering cash. Thus, you can get a good deal.
Simply because you’ve got the money does not mean you should rush purchasing a house. On a couple of occasions, cash offers might not be an ideal choice if you are purchasing a house. Here are some cons of cash offer:
- Your house can lose its value over time. This results in a poor ROI.
- You will sacrifice liquidity.
- You will lose your financial leverage on the mortgage company.
- You sacrifice tax deductions related to mortgage.
- It restricts your liquidity since it ties your wealth. It isn’t an excellent option for investors.
- It can be expensive to buy a house using a cash offer.
Difference Between Mortgage and Cash Offers
There is a major difference between a buyer who buys a house via mortgage and one who pays cash. Here are some of them:
The mortgage lender orders appraisals. Thus, it won’t be needed if you are buying for cash. A couple of buyers might still want a home appraisal. This is particularly true if you’re an investor who wants a high ROI.
When purchasing a house for cash, you will not require financial contingency. The reason for this is that it only applies to a mortgage. In addition to that, you might not require a sale contingency. On the other hand, you might require an inspection contingency.