There is no doubt that sellers prefer to sell their houses to potential buyers with a cash offer. Cash offers tend to make the process faster and simpler for both parties. However, it is not always the best option for everyone. As a buyer, you may want to consider if using a mortgage loan to buy your new house may be better than paying cash. Let us take a look at a few reasons why you should consider both.
Simpler process with cash
When you offer cash for a house, the process would not involve any financial contingencies that would otherwise apply in case of a mortgage loan. While appraisals are necessary when applying for a mortgage, these may not be needed when a cash offer is made. Similarly, closing the deal will be much quicker when you choose to pay cash and the associated closing costs would be relatively low as there would not be any lender fees involved.
Lower opportunity cost with mortgage
While a cash offer makes the process quicker and simpler, it requires a large sum of cash that could have been utilized elsewhere. A mortgage allows potential buyers to leverage their debt and benefit in a number of ways besides allowing buyers to invest their funds elsewhere. For instance, a mortgage would offer tax deductions and an opportunity for potential buyers to improve their credit scores.
Which one to choose
Choosing between a cash offer and mortgage loan comes down to your financial status as both are great options for different potential buyers. If you happen to be operating in a seller’s market where many buyers compete for one house, you may want to proceed with a cash offer to stand out in a big crowd. Remember not to overlook your financial standing and related risks. Consider a mortgage loan if your financial plans do not allow you to go all in. Remember to consider all factors so that you can make an informed decision.
You can get in touch with me for any assistance or advice about buying or selling a home in Greater Boston. Feel free to call me or send me an email or get in touch on Facebook.
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