There is a big emphasis these days on lowering your debt in order to keep your credit rating in good standing. This has led many to feel that buying a home with cash is a better option than carrying around a mortgage for years. While this can be a good idea in some cases, there are things that you will need to consider before you decide whether cash or a loan is best for your situation. First, let's take a look at the pros and cons of buying a home with cash in Northern Virginia.
Buying a Home with Cash: Pros
Security
The first thing that comes to mind in making a cash purchase for a house is security. You won't have those monthly mortgage payments hanging over your head for years to come. This is a great comfort should your financial situation suddenly take a turn for the worse and you find yourself in financial distress. At least you won't have to worry about the bank foreclosing on your home, because you already own it.
Cutting Unnecessary Costs
You are also cutting out all of those costs associated with using a loan to buy a home, such as the interest fees, private mortgage insurance, appraisal fees and some closing costs.
More Attractive to the Seller
Buying a home with cash makes the offer a more attractive option for the seller. They won't have to worry about a buyer not being able to be financed and having to back out of the deal. It also brings the opportunity of a faster closing and, in some cases, a buyer might be able to get the seller to agree to a little bit lower price if they pay cash.
Selling is Easier
Should you choose to sell your home in the future, having purchased it in cash means there is no loan leveraged against the home, making it much easier to sell the home. This means that there are fewer concerns regarding a fluctuating market and having enough to clear the mortgage payments.
Equity
Buying a home with cash gives you total equity that can be tapped into should you be faced with a real emergency and need to pull some cash out of the home.
Are you considering buying a home and are trying to decide between paying cash for your Northern Virginia real estate versus getting a mortgage? Email me at DarrenRobertsonHomes@gmail.com and we can discuss these pros and cons in greater detail!
Buying a Home with Cash: Cons
Liquidity
Paying for a home in cash means that you are tying up a large sum of cash in one type of asset. Having paid for your home in cash means that, should you need money fast as a result of illness, a disaster, or to help a family member, the only way to take money out of the home is through selling the property or borrowing against it. And in some cases, especially for those who are retired, getting a 2nd mortgage can be difficult due to the fact that they have no income source.
Many experts advise that, should you choose to purchase your home in cash, it makes sense to open up a home equity credit line to safeguard yourself should you need access to cash in the future.
No Leverage
Real estate leverage can actually have an upside where maintaining a bit of debt is concerned. Mortgage payment amounts are locked in and, if you were lucky enough to get an interest rate that was favorable, you may actually end up making money during times of inflation. Paying with cash takes that bit of leverage away.
Zero Tax Advantages
You are not awarded any tax reduction if you have purchased a home with cash.
Are you thinking of buying real estate in Northern Virginia? Call me at 703-462-0700 or email me at DarrenRobertsonHomes@gmail.com so I can go to work for you!
Have you had any good or bad experiences when paying cash for a house? I'd love to hear from you in the comments section below!