You have finally found the perfect house for you and your family; you sidestep all the hassles involved with the bank and related mortgage paperwork and break out your chequebook to purchase a home outright. How convenient and stress-free everything would be? While paying cash for a property is still a far-fetched dream for many prospective buyers, it is becoming more and more common in the real estate market.
When you have enough funds to buy a home for cash, what sense does it make to borrow money at high-interest rates? Other than no mortgage, there are other benefits as well to buying for cash. From liquidity discount to no extensive paperwork, there are many beneficial aspects of purchasing a property for money.
Cash Buyers Often Get a Discount
Earlier the sellers did not care if the buyers come with cash in hands or all financed. It was all about getting the highest number. However, now the game has changed completely. Even though banks are always ready to lend, the process has become more onerous, and the buyer must undergo many hassles to get financed. Therefore, when a customer comes all ready with the required cash in hand, he often gets qualified for a price discount depending on the sureness of sale.
Closing Costs Are Lower with Cash
Hundreds of dollars are entailed in the entire process of applying for the mortgage through Bank attorney and additional thousands in loan origination fees and different junk charges. However, as a cash buyer, you can save significantly well on closing costs. You are not required to put money down the drain unnecessarily for an appraisal. In fact, sometimes mortgage lenders insist upon going for many evaluations. However, with cash sale, you overcome all such hassles and unnecessary expenditure.
Credit Report does not Matter
Late payments, foreclosure and outstanding mortgages always make the impression of your credit card bad. Moreover, because these credit reports are extremely crucial when applying for a mortgage, such signs can dissuade lenders from trusting you again. Even if banks agree upon sanctioning you a loan, your interest rate can be much higher because of a low credit score. However,cash property buyers can always avoid such issues. When you pay money for a home, credit problems are not an issue.
Buyers Save on Future Costs
Not only does buying home for cash save you on mortgage, but it also helps you save money by reducing or eliminating future expenses. Many lenders require private mortgage insurance that can add hundreds of dollars a year to your loan. However, when buying a property with cash, you save on these costs as well.
Buyers Get a Tax-Break
Interest on a certain amount of mortgage principal used to buy, build or improve a home currently tax-deductible. However, borrowing against your equity later for something other than home improvements has a very limited tax deductible limit. Moreover, even that is not allowed in various circumstances. So, buying with cash gives you a break from tax.
With interest rates so low, it is more beneficial to use your cash to invest and avoid overburdening yourself with a mortgage.