Advantages and Disadvantages: Paying Cash For Your Home

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Advantages and Disadvantages: Paying Cash For Your Home

If you have the ability to pay cash for your home, you might be thinking why even consider another option? Depending on your future and goals, it might be the best option for you, or it might set your plans back a little bit.

With the current real estate market, it might make more sense to pay cash to motivate the sellers and snag your dream home, or perhaps you have your eye on a cheaper fixer-upper that makes paying the full price in cash more realistic.

Either way, there are pros and cons to paying cash for your future home, so the main question to ask yourself is: Is it worth it?


Beat The Competition

It’s no secret that the last year of real estate is going to make history as one of the most competitive markets, making it ideal for sellers. Applying for a mortgage and gathering all the paperwork together can be time-consuming, which is why closings are usually 30 days or longer. If you’re paying with cash, you’re foregoing the mortgage application process, therefore making you an asset to sellers. They know that they can get a quick sale and close faster with cash buyers, putting you higher on their list of buyers to accept. This is very beneficial if the home you’re looking in to is your dream home.


No Interest or Mortgage Payment

With low-interest rates and the popular option of refinancing your mortgage, interest rates still add up to a significant amount of money to pay out over 15 or 30-year loans. Having the option to pay cash for your home not only completely eliminates that extra cost that gets tacked onto your mortgage payment, but also eliminates that monthly mortgage altogether.


You Might Get A Better Deal

Cash not only makes you more attractive to sellers, but it also gives you the power to bargain a little bit on the price. An all-cash deal is much more appealing to sellers than going through a bank to get their money because it means they get access to their cash much faster. This gives you, the buyer, the opportunity to ask for a price cut or certain things to be included or added onto the offer of the home, such as fresh interior paint or other nuances that sellers don’t usually hassle with.


No Investment Opportunity

If you decide to pay for your home in cash, all your money is tied up into one asset. Having a mortgage really isn’t that bad. After all, most people don’t even end up staying in the home for their entire 15 or 30-year mortgages, but it still helps your credit by having one or frees up your money for another investment. 

There are definitely better ways to invest your money rather than putting it all into a single home. Consider other investment opportunities that can set you up for a comfortable retirement, or that can allow your kids the opportunity to further their education after high school.


No Money For Remodels

Ask yourself, if you end up paying all cash for the home you want, are you going to have anything left over to do any remodels? The home might be perfect for you now, but as trends change or you start living in the home, you might want to make some upgrades later down the road. 


The Bottom Line

Of course, there are other small advantages such as waiving an inspection by paying cash – something to consider if you are looking at a fixer-upper that isn’t yet up to code. The biggest thing you should consider is which option is going to give you the most financial gain over time, and what is going to give you a better return on your investment. Another consideration is your own personal situation and why paying cash might benefit you more than what the disadvantages might be.

Allow Jacob Realty to help you find your dream home, or sell your current home to obtain your new dream home! Serving Victoria, Brenham, Goliad and the surrounding areas!

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