Cash or Mortgage? Which is best option when buying a home?
Over time prospective home owners often find themselves at a cross road on deciding whether to buy a home with cash and get it over with and focus on other things, or opting for a mortgage which allows you to take immediate possession of the house while your outstanding balance is spread out overtime at a low and fixed interest rate.
Cash Purchase
But there is a lot to consider when weighing your options if purchasing a home with cash versus obtaining financing via mortgage. Below are pointers that will help you make the smart move for you and your family.
Paying for your home instantly phase out the option of trying to raise funds through the bank which comes with a repayment plan and interest. Apart from paying immediately which is a smart move for the buyer, it makes your offer more attractive to the seller – who is down to negotiate and likely to accept your cash price.
A seller who knows that you don’t plan to apply for a mortgage is likely to take you more seriously. It is flexible closing a home deal when cash is on ground than one that requires funding, the prospective buyer is at liberty to take a tour of the property, lodge complains on what he/she want repairs on before deciding to pay.
Mortgage
Unlike the home buyers who’s got their cash on standby and ready to seal the deal, a lot of prospective home buyers end up losing their dream because they feel they can easily raise funds without the help of the bank or they left sorting their mortgage too late. Hence, processing your mortgage puts you in a stronger position with the seller, it gives you the confidence to share your opinion on the property, and it reduces stress.
The first thing you need to begin the process of applying for a mortgage before contemplating on what type of house you want to buy or its location. That way you can easily show your interest in any new property.
The mortgage home purchase process puts you at advantage compared to the cash down buyers who don’t need a mortgage principle, because some sellers will prefer a buyer who is further down the road in the mortgage process.
Our advice
When making a decision as regards which purchase option you will be going for, we strongly advice that you go for a choice that will give you the greater return on investment whether it’s a rental or commercial property or when you finally decide to sell if it’s a family house.
