Do you automatically think about taking out a mortgage when you consider purchasing a new home? If you have the cash, it might be wise to consider paying cash. A cash real estate purchase can be completed much faster, and it might also give you the opportunity to get a much better deal especially in the Cape Coral/Fort Myers Real Estate Market. Furthermore, if you are concerned about parting with your cash reserves, there are some quick ways to get most of your money back.
The idea of writing a check for a new home purchase might seem pretty revolutionary. Take a moment to consider some of the advantages.
. No interest
. Faster closing
. Sellers willing to deal
If you do not have to take out a loan, you do not have to worry about mortgage interest rates. If you take out a 20 or 30-year mortgage, you may end up actually paying twice as much as the sales price of your home because of interest charges. The first advantage of paying upfront is that it can save you a lot of money.
Lots of people wait several weeks to get their loans approved. If you can pay cash, you also get to skip the entire mortgage process. You will not have to answer a lot of questions and dig up reams of paperwork to satisfy a loan officer, wait for your loan to get processed, or get hung up waiting until your mortgage gets approved.
One of the biggest reasons to consider writing a check for your next house is that you will become a very attractive buyer to many real estate agents and sellers. Lots of home deals fall through or get delayed because of the mortgage application and approval process. Sellers and brokers may be eager to negotiate with you on the sales price, upgrades, and repairs. Paying cash can help you get more value for your money. With some of the areas fantastic waterfront property, getting the home of your desires, could come at a bargain price.
Can You Get Your Money Back?
If you are reluctant to part with your cash reserves, there is a simple solution that will still let you enjoy most of the advantages of paying cash. Once you have closed on your property, you are free to turn around and search for refinancing offers. Some mortgage companies require a waiting period before you can refinance on your home, but others are more lenient.
You should be a very good candidate for refinancing. After all, you just paid cash and have 100 percent equity in your property. If you have decent credit scores, you should be able to qualify for low interest rates too. Typically, refinancing interest rates are lower than original mortgage rates. You can choose to refinance as much or as little of your home as you like.
These days, some home equity loans and home equity lines of credit (HELOC) actually have lower interest rates than refinancing. You might choose one of these options too. The best solution depends upon your need for cash reserves and available loans in your area.
What If You Have Poor Credit Scores?
If you have low credit scores, you might think about using your extra cash to improve your financial standing before you think about paying cash for a house. In general, it is better for your credit scores to pay off revolving credit, like credit cards, before you attempt to pay off installment loans, like mortgages. Also, if you have poor credit, it might be more important to hang onto your cash reserves.
On the other hand, it might be tough to get good interest rates on a mortgage if you have low credit scores. That is why this solution can be an attractive alternative. You only need a good credit report to qualify for a mortgage, but you do not need it if you have upfront money to buy your house.
The right answer to this question really depends upon the urgency of your need for a new home, the reason why your credit scores suffered, and your tolerance for risk. In general, if you do not need the home urgently and are not certain if your financial situation is stable, you might consider holding onto your money. If the recent rash of foreclosures has taught people anything, it is that it is better to be safe than sorry when considering the purchase of a new house. Be sure to visit the Hamilton-Franklin Realty Foreclosure Hot List to find some of the best deals on the market today.