Do you have enough cash on hand to make an offer on a house without financing? If so, you may still be debating about if you should do it. Making a cash offer means that your liquid assets will immediately go away, but there are a few benefits that come with it that you should consider. Here are 3 reasons to use cash to buy your home.
Your Offer Will Be More Competitive
When you are in a multiple offer situation when trying to buy a home, the seller will be able to pick the offer they want. They may not always go with the highest offer, but the one they are sure will eventually close on the home. Making a cash offer will simplify the home buying process, since you don't need to get a mortgage. By cutting out that entire step of the process, it means you don't have to depend on a mortgage lender to secure your financing for the home. If an owner is determined to sell their home by a specific day, a cash offer could be much more tempting when compared to a financed offer.
The Home Doesn't Need An Appraisal
Another issue that comes up due to financing is a potential issue with the appraisal. If the home is appraised lower than what the purchase price of the home is, it will cause problems with financing. A mortgage lender may decide to back out of the deal because the house isn't worth what it is being paid for, even if it is a competitive market value.
Using cash means that no appraisal will be necessary, which clears the way toward closing on the home without any issues.
You'll Save Money By Not Paying Interest
A big debate with using cash to buy a home is what you could be using that money for if it wasn't tied up in the home. While you'll have the cash on hand by financing, it is not doing you any good if you are not actively investing it.
If you feel that the money you'd make by investing it is more than what you'd pay in loan interest, then it is definitely worth it to buy a home with financing. However, investments are not a guarantee of a return. Buying with cash ensures that you will be saving money in the form of not paying interest, and investments always have the chance of losing money.
Keep this information in mind as you look at homes for sale.