Guest Writer: Sally Norton When it comes to buying a new home, there are two main ways you can handle the financing. Today, we will take a deeper dive into the differences between buying with cash vs. getting a mortgage. Hopefully, this article will clear up any uncertainties you might have had and help you choose the option that is the best fit for your financial situation. The basics of cash vs. getting a mortgage If you ask people what they think is better, no one will tell you that having a massive debt is a good thing. However, that doesn’t mean that it’s an open and shut case. There are many nuances you need to consider before making the best financial decision. Funding everything with cash may sound like an unattainable dream for some. Honestly, most people will never have enough money set aside to fully buy a house just from that. Consider yourself lucky if you have that as an option. Despite being able to afford it, purchasing a home for a large amount of cash might not represent the best option. Let’s say you can’t afford to buy the home outright, but you do have a substantial amount in cash. Even sinking as much money as you can into the down payment to lower the mortgage rates will have its downsides as well. Putting all of your cash savings into a home is a huge commitment. On the other hand, you need to consider how long it will take you to pay off your mortgage and what kind of a burden it will leave on your finances. Getting a mortgage isn’t the same in your 20s and your 50s. If you are buying your first home a little later in life, your savings will hopefully be better as well. To better understand your options, let's look at buying with cash vs. getting a mortgage and the pros and cons of each of these approaches. Buying a home with cash Pros of buying with cash:
Couples often decide to buy a home together if they are getting married. Getting a mortgage Pros of getting a mortgage:
If you get a mortgage, you will need to deal with monthly payments. Drawing conclusions from buying with cash vs. getting a mortgage? Paying with cash is obviously going to be more attractive to sellers. They won't need to worry about buyers being declined for a loan. Also, sellers usually expect the sale to wrap up faster if they are dealing with a cash buyer. On the other hand, buyers can use cash payment as a negotiation tool to lower the price. Depending on your other finances, getting a mortgage can protect you from creditors. For example, in Florida, homes are exempt from certain creditors, making the mortgage a safety net. Of course, this can depend on homestead exemption laws and how much of the mortgage you have paid off. Whichever route you choose, you will need to keep in mind that you'll be facing additional expenses. Besides the closing costs, which we already mentioned, most people forget about the costs of moving. Besides being costly, moving is also pretty stressful. And you can make it much less overwhelming if you use the most efficient way to pack and hire a moving company. In fact, getting professional services is highly recommended, as DIY relocations can end up costing more. The bottom line As you have seen, there are pros and cons to both sides, and it’s not easy to determine a clear winner in buying with cash vs. getting a mortgage. Carefully consider your needs, current situation, and your financing options to make the decision that’s best for you.
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AuthorJason Gelios is a Husband and Father. After that, a Top Producing REALTOR®, Author of the books 'Think like a REALTOR®' and 'Beating The Force Of Average', Creator of The AskJasonGelios Real Estate Show and Expert Media Contributor to media outlets across the country. Archives
February 2025
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