The heat is on this summer, and it extends to the current housing market. As more potential homeowners search for their new great home, we’re seeing both cash buyers and financers.
There is truly no wrong way to buy a home! When it comes to cash or financing, we thought we’d share a few pros to consider for home buying: cash or finance:
Cash Buying
There are a number of pros to buying a home with cash. Most of them are centered on expenses cash buyers can drop. Cash buyers can often save on closing costs, because they do not have to pay a bank attorney for the mortgage as well as opting out of putting real estate taxes in escrow up front (and the same can be said for up front appraisal money). Other expenses cash buyers drop include title insurance and title charges. (Although it’s important to note that most realtors agree title insurance is an important add on!)
Agent note: Since paying in cash eliminates the need to pay interest on a loan, it tends to make the purchase offer more attractive to sellers. With a cash buyer, a seller does not have the same concerns about a buyer backing out of a sale from being denied financing.
Financing
Mortgage, most often, is a fact of life. While interest can be a turn off to some buyers, we’ve been fortunate to see low interest rates in recent years. The pro is, when you go with financing you save by not having to put up a substantial amount of money up front. Smart financers know that you can write off your mortgage interest when you itemize deductions – if they exceed the standard deduction. A lower tax bill in April is good news for everyone!
Agent note: Another perk of having a mortgage is when you finance you assume less risk (by investing 20-30% instead of 100%) should catastrophe strike your home.
Things to Consider
If you decide to purchase a home through financing, make sure you can easily afford the interest, homeowners insurance, homeowner association and other fees. It’s no fun to have surprise costs at the end of the day. Do your best to set up an emergency savings fund for expenses as a financial buffer.
Whether you decide on cash or financing, it’s important to choose the option makes the most sense for you and your family. Ask yourself which will provide the greater return on your investment, and remember to keep your eye on the big picture.
Are you looking for an incredible Nashville home? We’re here to help! Give us a call or drop us a line today.