Deciding to buy a home is easy to do, but figuring out how to pay for it requires some work. With current mortgage rates still very competitive, now could be a great time to act if you are ready to do so. However, you may be one of many people who debate between paying cash for the home or financing it with a mortgage. There are advantages and drawbacks to both options. After you get more familiar with the pros and cons, you can more easily decide which one is right for your situation.
The Cash Option
Buying a home with cash means that you avoid the entire financing process as well as related expenses. Interest charges over the life of a loan can be substantial, and the related closing costs can be thousands of dollars or more. If you have cash on hand, you may be able to close without delay, and many buyers will view this as an advantage. If you are in a market where bidding wars are common, this would place you in a superior position over other bidders. However, if you do not have enough cash available to pay for the house with cash, should you try to save up? Real estate prices have been rising at a fast pace recently, and this trend could continue. If you put off buying a home for a few years while you save more money, you could end up paying much more for a house than you otherwise would.
The Financing Option
By applying for a mortgage, you may not be able to close immediately as you would be able to do with a cash offer. However, you could close much sooner than you would be able to if you need to save your pennies. Keep in mind that the sales price of the home may be locked in once the offer is accepted even if you do not close for several more weeks. While financing does come with interest charges and extra closing costs, you may actually save money in the long run by locking in a low sales price today.
As you can see, there are many factors to consider before you decide how to pay. Consider speaking with a real estate agent to learn more about market conditions. You also should review your financial situation carefully, and you can contact the MortgageDepot team for more insight on current interest rates and programs.
Contact one of our loan consultants to learn more.
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