So, you’ve already found your dream home after a long search. The only thing that’s separating you from it is the purchasing process.
If you have enough money saved up to buy a house with cash, your decision already seems to be made. However, you might want to consider taking out a mortgage still depending on your circumstances.
Consider these First
Doucefleur/Shutterstock: On average, it takes anywhere between 30 to 60 days to close on a house
In general, paying in cash is the ideal route to go if you’re looking to close on a home quickly. You’ll also likely be freer to get a discount on the price of the home you’re eyeing as sellers might prefer your offer.
It’s also recommended if you aren’t planning on using the cash on other investment opportunities. Of course, there’s also the fact that you’ll be saving more money as you won’t have to pay interest on a mortgage.
Meanwhile, taking out a mortgage might work for you better if you prefer to have some extra cash to invest left after buying a home. It’s also a great way for you to improve your credit score, especially if you aren’t making other payments that can give your score a boost.
Let’s take a closer look at the perks of these two options.
The Perks of Paying in Cash
4 PM production/Shutterstock: Buying in cash will allow you to move into your new home faster as sellers would prefer to accept your offer
The most convincing argument for paying in cash is that you won’t have to pay any interest. Interest on the standard 30-year mortgage can cost you extra tens of thousands of dollars, which you can use for other important expenses.
You can also dodge paying the many fees that come with closing on a home. Borrowing from a lender often comes with ‘junk fees’.
Not having a mortgage to pay back also decreases the monthly house-related payments you’ll have to make. This is a welcome change considering that you’ll likely already have to pay for property taxes, insurance, and homeowner’s association fees.
The Benefits of Taking Out a Mortgage
Bubbers BB/Shutterstock: Having some savings left can give you the budget to fund some home improvement projects
On the other hand, you might want to take advantage of the incredibly low mortgage interest rates right now. Leaving some cash to play with is also a smart choice as you can invest the rest of your savings into the stock market.
Another perk of taking out a mortgage is that you’ll be leaving yourself some emergency cash after paying the down payment.
You can also enjoy some tax benefits when you have a mortgage. Interest payments count as deductibles and you may be able to write off a significant amount.