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Maybe...? Maybe...? Maybe...?
NO. No negatives to a cash offer, other than the fact that money is so cheap to borrow right now, why tie up cash?
We are in the sweet spot for home loans right now, IMO..
But, if an unencumbered deed, no monthly payment, or poor credit are motivators, "Cash is King."
I've been able to buy houses with immediate cash deals a number of times.
The seller knew for certain that I was going to close on the property on or before a date that met their needs, and not have to worry about me qualifying for a loan, or worried about a lender's appraisal coming in too low so that the financing was in doubt or I needed to come up with more cash at the closing.
My offers were accompanied by a refundable 25% earnest money deposit if the seller couldn't close the deal for any reason on their part. That 25% deposit gets their attention real fast, especially if they've seen offers with $1,500 earnest money from other people that weren't necessarily qualified buyers.
It's nice when you go to a closing and it's the title company rep, the buyer, and the seller. Almost no paperwork to complete the deal, and no long drawn out mortgage closing to secure the funds at that time.
Another advantage to a cash deal ... as a buyer, I've had lenders play games with holiday weekends and other excuses (72 hour right of recission, courier time delay, bank float, etc) to not fund a loan. But they were charging me interest on the loan from the day it was closed. Yes, 7% or 8% interest on 7-14 days isn't a daunting number. But it's the principle of it that bothers me ... charging me interest for money which you have not delivered but we've closed on the property.
I've had this game played on me a couple of times doing re-fi's, too ... and then I got caught in the situation where the old lender hadn't been paid off yet, so they were still charging me interest while the new lender was charging me interest. Paying on two 1st mortgages at the same time for one property is against my values.
Ouch! I wish you had a buyer's agent. Since you don't - you should get a lawyer.
You are clear on insurance - that's good. I don't know your state laws - here in Colorado a buyer doesn't have to buy the home if the home is not insurable - but that varies by state.
You would only need an appraisal if you are uncertain about the value of the house. In a typical transaction with a lender - the lender requires the appraisal. If the home doesn't appraise for the purchase price, the seller will need to lower the sales price or the buyer may walk away. If you had a buyer's agent s/he could have pulled comps and determined the value of the house.
Cash deals are great. I've purchased and sold cash - it's easy, saves a ton of money and every one is happy.
Ouch! I wish you had a buyer's agent. Since you don't - you should get a lawyer.
You are clear on insurance - that's good. I don't know your state laws - here in Colorado a buyer doesn't have to buy the home if the home is not insurable - but that varies by state.
You would only need an appraisal if you are uncertain about the value of the house. In a typical transaction with a lender - the lender requires the appraisal. If the home doesn't appraise for the purchase price, the seller will need to lower the sales price or the buyer may walk away. If you had a buyer's agent s/he could have pulled comps and determined the value of the house.
Cash deals are great. I've purchased and sold cash - it's easy, saves a ton of money and every one is happy.
I will be contacting my attorney before making the bid.I will find out about house insurance or make sure the lawyer writes that into the contract (contingent upon attaining house insurance).
I am not uncertain about the value of the home in anyway. I have been following the market/that area for over 3 years so there is no guessing at all on my part.
Yes. Why would you pay all cash for a home if you can borrow money at less that 4% with tax deductible interest?
Why would you lose the whopping 1.5% interest on your savings and pay 4% for a mortgage? Ummm, 2.5% minus the measly tax advantages. Unless you're in a bracket where you need a loss.
Why would you lose the whopping 1.5% interest on your savings and pay 4% for a mortgage? Ummm, 2.5% minus the measly tax advantages. Unless you're in a bracket where you need a loss.
The assumption is over the long run, the cash not used to pay for the house can be invested for a significantly higher rate of return. Would you borrow money at 4% if you could invest at 8%?
The assumption is over the long run, the cash not used to pay for the house can be invested for a significantly higher rate of return. Would you borrow money at 4% if you could invest at 8%?
If the 8% was guaranteed, I might consider it. Without an iron clad guarantee there is no way.
OP, I have bought my last 3 homes with cash. There is no reason for me to borrow, pay huge fees, pay interest. The savings beats the "tax break" every single day of the week, short term and long term.
I have never had a seller assume that there was a bottomless bag 'o cash in my hand. I have had closings as quick as 8 days.
Yes. Why would you pay all cash for a home if you can borrow money at less that 4% with tax deductible interest?
Why would you pay 4% if all you can earn on the money is 1%?
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