How To: Buying a Home With CASH
While it does take less time than purchasing a home with financing, buying a home with cash can still involve waiting. While buyers might be more eager to accept an all cash offer, it isn’t as simple as showing up with a big bag of cash and having the buyer give you the keys. There are still steps you’ll have to follow to get the right paperwork in place to complete your purchase.
Making an All Cash Offer
Buying a home with cash may allow you to place a lower offer than others who are using financing. Dealing with an all cash buyer means a shorter closing process for the seller, so if they are eager to get rid of the home, they may be willing to accept less from you than a buyer who must secure financing. Before accepting your offer and setting a closing date, the buyers are likely to want to see proof of funds from your bank to be sure the offer is legitimate.
Closing on a Home You Purchase with Cash
Even if you pay for your home in cash, that doesn’t mean you get to move in the next day. There is still a closing process that includes filling out paperwork, transferring the title and paying the seller. Since you can’t pull up to a closing with a briefcase full of cash to pay for the property, you’ll need to pay by certified funds, like a cashier’s check or a wire transfer. You’ll also need to put down a deposit of one to two percent, which is called earnest money. This keeps the home off the market until you can close on it and proves you are serious about the purchase. The title documents need to be transferred from the seller to you and getting the required paperwork together might take a lawyer or closing agent a week or more. If the seller has outstanding liens against the property’s title, those will have to be resolved before a closing date can be set. But in many cases, no complications arise, and cash buyers can close on a home in one to two weeks.
The Risks of Buying a Home with Cash
Once you purchase a property with cash, it belongs to you as of the date you close. While no one wants to walk away from a home, the truth is that if you finance the purchase through a lender, you can do so if the situation becomes desperate. While there are negative effects to your credit score, many people recovered from similar situations during the recession. If you purchased a home with cash and are now the property owner, the only way to leave a property if it becomes too financially demanding is to sell it at current market value. This can end up meaning a loss for you.
If you’re ready to purchase a home, The Core Group can help. Click here to start looking for a new home with our help.