Buying a Home With Cash vs. Financing: Which is Better?

By Jeff Cheney | On

Once you’ve made the decision to buy your own home, you must now sit down and look at how you are going to do so. Depending on your financial situation, cash may be an option that is available to you. In this case, it is a good idea to look at whether buying a home with cash or financing is the better choice. You may automatically think that buying a home with cash is the more logical choice, but not so fast. There is actually a lot to consider when contemplating purchasing a home with straight cash versus taking out a mortgage. Sure, buying a home with cash is the favored approach of real estate investors, as it allows you to stay away from carrying too much debt and instead build your credit and overall financial health. Keeping that in mind, there are also many advantages to taking out a mortgage and financing the purchase of your home.

Why Paying Cash May Be the Right Choice

OK, it is no secret that paying cash for a house automatically eliminates the need to pay interest on any loan and closing costs. Furthermore, paying cash may make your purchase offer more attractive to sellers, especially in competitive markets such as Frisco, Little Elm, and other areas of North Texas. Depending on the situation, a seller may be more likely to take a cash offer over other offers, in large part because they don’t have to worry about a buyer backing out due to financing problems. When buying a home with cash, your chances of moving in sooner may be upped, as you won’t have to wade through all the red tape.

Let’s Not Forget About the Advantages of a Mortgage

There are obviously numerous advantages of purchasing a home with cash, but that is not to say that taking out a mortgage isn’t a good option, too. Even if you have the cash flow, it may be wise to finance your home. This will serve as a safety net for you and won’t tie down all your finances, allowing you to move forward with the purchase of your home with more confidence. Buying a home with cash means you are diminishing your liquidity in a big way, which may not always be ideal. By taking out a mortgage, you will have extra cash for any major repairs and renovations that you may need to undertake down the road. Furthermore, taking out a mortgage will also help build your credit, which could be beneficial for you if you want to make any future investments or big purchases. Other advantages of taking out a mortgage include the fact that mortgage rates are low, mortgage interest is tax deductible, you will only need to bring a small deductible, and you will be able to invest your money elsewhere for a better return.

The bottom line? It is important to discuss your financial situation and options with a lender, financial advisor, and a real estate broker from The Cheney Group. With our help, you will be able to make the right choice for your family and your particular situation. To learn more about our real estate services, please contact our North Texas office today.