Nothing is more excited and nerveracking as buying a home. Many of us search for weeks or months to fnd the house we think is perfect. But when you find that perfect home, there are many obsticles that can stand in your way of puchasing the home.
When you are ready to purchase a home you must be able to pay for it. Financing a mortgage loan is the most common way people fund their home purchase. But, there are a few people that are able to purchase their home in cash. There are different benefits and drawbacks associated with buying a home in cash over financing.
Prime position. When you are putting an offer on a home, having a cash offer puts you ahead of financed offers. The buyer knows that you ae guaranteed to have the means to purchase the house; whereas, a financed offer is more risky to the buyer as the lender may not agree to back the potential buyer in the end. Offering to pay cash for a house can demonstrate the level of sincere interest in buying the home and signals that you are able to complete the closing process much faster.
Better deal. Often, a cash bidder can obtain the home at a cheaper price than a financed bidder. The seller is more likely to take a smaller, guaranteed offer over a larger, unsure offer. This is not always the case; however, sellers prefer cash buyers and are often willing to provide them with more concessions. For example, a person offering to pay cash for the house is also less likely to ask the seller to assist in paying for closing costs. A seller nets more money if they do not have to pay closing costs and may be willing to make up for that by accepting a smaller offer for the home. On the other hand, a seller may feel like the cash bidder has more resources and may try to play “hardball” to get more money out of the bidder.
No foreclosure. A cash buyer does not have a mortgage loan. Therefore, there are no payments to be defaulted and the home is unable to go into foreclosure. This does not mean a cash buyer is not at risk of losing their house. If a cash buyer defaults on paying the property taxes, the home may be subject to seizure and liquidation by the county Tax Collector. However, this process is much slower than a foreclosure and the homeowner is allowed more time to catch up on delinquent payments.