If you are looking to buy a home with cash, rather than traditional financing, there are a few things you will want to consider.
While many people choose to finance their home over the course of 15 or 30 years, some have the means and want the benefits of paying with cash.
Today, we are going to explore how to buy a home with cash! These tips will help guide you in the right direction.
Determine How Much You Can Spend
Even though you may have a significant amount of cash to buy a property outright, it doesn’t always mean that’s the best use of that cash.
Instead of depleting your total cash reserves, take some time to look at your assets and your income.
First, determine how much you have saved for retirement and how much you have put back for emergencies.
Your lifestyle will determine how much you need for retirement and it’s suggested to have 3-6 months of income saved for a rainy day.
If you’ve considered your retirement and have sufficient cash to cover emergencies, then chances are you are ready to pay cash for a home.
Keep Closing Costs In Mind
When you purchase a home, there is always closing costs that need to be paid.
While your closing cost may be reduced by paying cash, there are still some things you will be required to pay.
On the other hand, if the seller is motivated to sell the property, the closing costs can be negotiated, and a cash offer may make your offer more attractive.
Choose Your Ideal Area
The state of Michigan has many great real estate markets to choose from.
Depending on your own personal needs and desires, you’ll want to investigate which area is best for you.
Are you purchasing a home as an investment property? Will you plan to live at this property for part of the year, or year round?
You’ll want to look for an area that is in your price range and has the most potential to increase in value over time.
Working With An Real Estate Agent
While it might be tempting to try to find a home on your own, your options may feel limited.
Since you are paying with cash, real estate agents can help you locate sellers that are more likely to give you a better price.
Also, a real estate agent will know the local housing market and can guide you in the right direction while giving you sound advice.
Making An Offer
When it is time to make an offer, you will likely have some advantages when paying in cash. When a seller sees that you are willing to pay in cash, you can often get a better deal on a home.
Ultimately it will still depend on the motivation of the seller, so you can’t assume a cash offer will get you a better deal.
You can make a cash offer that is lower than the asking price, but you don’t want to offer so low that it offends the seller.
The Benefits of Buying A Home With Cash
Now that we know how to buy a home with cash, let us talk a little more about the benefits of doing so. Below is a list of benefits that you should always keep in mind.
- As we have already learned above, paying cash for a home can get you a really good deal.
- Most sellers are happy to take a cash payment and can often lead to a deeper discount on the home.
- Since they can have cash in hand quickly, it will likely make your offer more attractive than other buyers who are using a mortgage to buy a home.
No Need To Worry About Credit
- One of the biggest obstacles that many potential home buyers face is poor credit or not enough credit.
- Mortgage companies are not very likely to give you a loan if your credit is bad. But if you are paying with cash, you will not have to worry about your credit.
- In fact, your credit score will not be checked since you have the funds to pay for the home in full.
You Will Save Money In The Long Term
- When you purchase a home with a loan, you will have to pay interest back to the mortgage company.
- If your interest is high, you will be paying much more for your home than the original asking price.
- Over the years, that could add up to a very large sum of money that could have been kept by you.
- With cash, you will never have to worry about paying back any interest and you can keep more of your hard earned money in your bank.
- Since the property will be owned outright with no loans, you will ultimately have more freedom with what you choose to do with the home.
- If it is your primary residence, or if you decide to rent it out, you won’t have restrictions based on a mortgage that ties you to the property.
If you are financially stable and you have enough cash to purchase a new home, then real estate is typically a great investment.
Contact The Norber Real Estate Group
The best source of information about local communities and real estate topics is your real estate agent. Give Joshua Norber of the Norber Real Estate Group a call today at 248-785-3737 to learn more about the area, discuss selling your house, or tour available homes for sale.