When selling a home, buyers may wonder whether it’s more advantageous to pay cash than to secure mortgage financing. While that definitive answer varies according to individual financial situations, some differences apply to many real estate transactions. Here are some of the main ways that cash offers can differ from financing a home:
- When buying a home with cash, buyers don’t have to go through the loan application process, which can save time and paperwork.
- Buyers may not realize that an earnest money deposit is usually still required for cash offers.
- Cash buyers don’t have to worry about qualifying for a certain mortgage amount. They also don’t have to pay mortgage interest or make monthly payments.
- For real estate contracts, cash buyers may need to provide “proof of funds” to show they have adequate money available to purchase the property.
- Even if a buyer is paying cash, it’s still a good idea to have a home inspection performed and they’ll also be responsible for paying property tax, homeowners insurance, and Homeowners Association fees, if applicable. Cash buyers may also still need things like title insurance and termite inspections to proceed with the deal.
- Although a buyer doesn’t necessarily need a home appraisal to be completed for a cash offer, they may choose to do so for their information and reassurance.
- Cash offers may be more attractive to sellers, especially in multiple offer situations. That’s because sellers (and buyers) won’t have to worry about loan approvals or be as concerned about appraisal results. Cash buyers may also be able to close sooner, which is often attractive to sellers.
- Cash deals may have lower closing costs because no lender is involved with associated fees.
- With a mortgage, buyers can use money for other things, such as investments.
- Mortgages may also help reserve buyers’ cash for home repairs and other financial emergencies.
- Mortgages may have tax advantages for some buyers, so be sure to tell buyers to talk to their accountant or financial advisor about tax implications.
The purchase of a home is one of the biggest investments a person will ever make. Whether buyers pay cash or finance that purchase, budget protection should always be a priority. HSA home warranties can help buyers safeguard their household budgets from the expenses associated with unexpected, covered home repairs or replacements. Major components of many home systems and appliances can fail over time due to normal wear and tear. When such breakdowns happen without warning, budgets can be stretched, and nerves can be frazzled.
With HSA coverage, homeowners have a strategy and can forecast what expenses to expect and what to do when covered breakdowns occur. In addition to valuable coverage, HSA coverage gives homeowners access to reliable service professionals for covered malfunctions. To find out more about how HSA can bring budget protection and peace of mind to all your clients, talk to your HSA Account Manager or visit onlinehsa.com.