August 17, 2015
The primary appeal of buying a home with cash is obvious: security. That monthly mortgage payment won’t be hanging over your head should your financial situation take a sudden turn.
There are drawbacks to paying for a house in full, though, the most important of which is liquidity. If you need to get your hands on cash quickly to cover something unexpected – sudden illness, a family member in financial trouble, legal entanglements or a natural disaster – you can only get it out of your home by selling or borrowing against the property. Retirees in particular can find it difficult to obtain a second mortgage, or even a home-equity loan, because they have no source of steady income.
There are, of course, more advantages to buying a house outright, but many of these are never considered by buyers who are in the position to do so.
• Sellers love all-cash home buyers: Everything becomes easier on the seller’s end when you can offer to pay for their house in cash. This can give you an edge if another buyer is interested in the property, or if you want to try to negotiate a better price.
• You can save money on closing costs: These include loan origination fees, costs associated with having the property appraised, and various closing costs typically required by lenders. This can equate to thousands of dollars in savings.
• You can close on your new home faster: If are buying your home with a mortgage, you typically have to wait between 30 and 45 days for the paperwork to finalize before you can close on the purchase. If you are buying with cash, the transaction can take place in about one week.
• It is easier to get home equity loans: When you apply for a home equity loan line of credit, your financial institution determines how much you are allowed to borrow based on how much equity you have built up in your home. If you have purchased your house with cash, you will be able to borrow up to about 80 percent of its value if you are faced with an emergency or need the money for home improvements or other projects.
• Fluctuations in the housing market will not affect you: When you purchase your home with cash, the market fluctuations, which typically right themselves after a number of years, will be far easier for you to weather.
Mammoth Lakes is an ideal market to make all-cash real estate purchases. Contact Sonja today to see what properties are available. She can be reached by phone at 661-979-9000 or by email at [email protected].
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