If you’re shopping for a home, especially in a hot market like this one, you might hear about people making all-cash offers to buy properties in your area. There are many benefits to buying a house with cash, including making your offer more appealing to sellers. But obviously, not everyone can afford that kind of large upfront payment without the need for financing.
Can you buy a house with cash?
Yes, it is possible and perfectly legal to purchase a home with cash. If someone is selling a property for $250,000, for example, and you have more than that in your bank account, there’s no reason you couldn’t offer to simply write them a check then and there.
It’s important to note, though, that a cash home purchase doesn’t literally mean a mountain of hundred dollar bills. It just means you’re paying in full, upfront, with no financing. While you could buy a home with physical cash, carrying that many paper bills and dealing with IRS reporting requirements for such large cash transactions make it not very realistic.
Should you buy a house with cash?
There are several things that make buying a home with cash appealing, but the most basic is peace of mind. If you pay for a home in full, you own it outright. That means no need for financing from a bank or other lender, no debt and no mortgage bill each and every month. You will always have a place to live, and there’s no risk of missed payments or foreclosure.
Offering to pay with cash also makes your offer more appealing to home sellers, because they get paid faster, with no chance of a mortgage falling through or not being approved. In addition, eliminating the lender speeds up the closing process considerably.
Pros and cons of buying a house with cash
There are both advantages and drawbacks to paying cash compared to getting a mortgage.
Reasons to buy a house with cash
- No monthly payments: If you pay for your home in full, that means you don’t have to worry about rising interest rates or monthly mortgage bills.
- Lower closing costs and faster closing: Many closing costs, and delays, are related to securing a mortgage. Skipping the loan process makes closing proceed faster and eliminates costs like origination fees.
- More attractive to sellers in a competitive market: With an offer contingent on financing or appraisal price, there’s always the chance …….