Cash might look like the ideal way to buy your home. You are not riddled with played out processes. Instead, all paperwork is completed on the day, and the ownership of the home transfers to you. It is convenient, safer and a better way to pay for your home. But paying with cash also attracts some challenges. Should you pay for your home in cash?
Paying for your home in cash can attract a number of advantages. First, you will not have to make regular mortgage payments that could increase the total outlay on the house. By paying in cash, you may reduce the total cost of the house. Paying in cash also reduces third party involvement, which also reduces risk of loss through defaulting.
Paying in cash improves the likelihood that you will get a good deal for your home. As an attractive and rare buyer, you are better placed to negotiate the deal for your home better than any other buyer who may be paying over a longer period. By paying through a lump sum cash payment, you are essentially removing any future transaction stress factors from yourself, your seller and the agent. This will make it easier to get a great deal, since you are a buyer the seller cannot afford to lose.
You will ensure quick closing and get a sense of security by fully owning your home when you purchase it. Paying in cash means an end to drawn out negotiations, which can make the entire home buying process a stressful one. You will also be assured of full ownership, and that nobody can reclaim it from you on any technicality. Paying in cash also allows you full buyer’s choice, meaning you can buy a home in whichever condition, as long as you are within acceptable range of the asking price. It increases the element of choice for you.
Paying in cash attracts some disadvantages. For starters, you will lose a large amount of money, which is a liquid asset. You may have trouble coming into such amounts of currency all at once, which somewhat reduces the disposability of money available to you. You also give up on any tax deductions that would accrue on your due interest. Many people who pay in cash may do it because they believe that such money will find its way back to them due to the profitability of real estate investments. Real estate investments can take time and have no guarantees. This means that it could be some time before you may be able to get any profits.
Paying for your home in cash stands to make you benefit more than you might lose. However, the loss is still significant. By paying for your home in cash, you may lose any beneficial tax deductions that may accrue on interest, as well as losing a large amount of the liquid asset that is money. You should consider whether the benefits outweigh the challenges in all cases before paying in cash.