Smart Homebuyers: Four Reasons Not to Purchase Your Home With Cash

“A house can be a lifelong romance, and we should find ourselves falling in love with our homes over and over again.” –Suzanne Tucker

There is a myriad of reasons why a straight out all-cash deal might be beneficial, but it is not always recommended.

However, with today’s fast-selling real estate market conditions, it can be incredibly tempting to go all-in with your money—particularly if you can find an incredibly good deal. Of course, much like any homebuyer looking for their dream homes, a seemingly wise move would be to lock it down immediately and offer to pay straight cash. Indeed, if you have the means, paying in cash might be an excellent way to fast-track a deal. Plus, a seller might be more likely to accept your offer. But does having the means to pay as well as having sufficient liquid assets be reasons enough to think that purchasing a home without a loan is a good idea? Well, if you are looking to lock that serendra bgc property down with a cash payment, you might want to reevaluate your decision first.

Here are some of the soundest reasons why paying in cash might not be such a good idea after all:

1(1)    You need to keep some liquidity

Purchasing a home with straight out cash might not be a good idea if you have just enough liquidity to pay for it. Remember, cash is essential to have on hand for anything that might come up. Furthermore, cash would also form part of contingency plans for any emergencies that might possibly occur. From needing to fund a medical emergency or losing a job to financing a new roof, you would want more than enough cash to serve as a buffer for any of these possibilities. Having enough money to pay for other stuff or other things that might come up is paramount. So, if you have enough cash money only to pay for your new home, then look for an alternative way to pay.

2(2)  You qualify for a solid mortgage

More often than not, having enough cash means that lenders would often view you favorably for mortgage options. Although interest rates are constantly and steadily increasing, they have never been as historically low as they are now. With cash, you can put down at least twenty percent on the home with a fixed-rate mortgage. In this way, you get to keep a significant portion of your liquid assets and pay only a minimal interest rate. Furthermore, your significant down payment would effectively prevent you from having to pay private mortgage insurance.

    (3) Your money is better invested elsewhere

So you might have scored big and cashed in right away, but that does not mean that a home would be the best investment you can make right now. Even if you are looking for potential homes outside the general metropolitan area, so long as you have enough cash to pay for a home outright, chances are you have a sizable amount of money with you. This does not mean that your choices are limited between paying for real estate property and have it grow stagnant in the bank. Remember, there are other forms of investment as well. Mutual funds, personal businesses and stock markets are all excellent forms of investment. Do note however that there is no get rich quick scheme in investing. So, do your research on the numbers first before putting your money anywhere.

2 (4)  There is no guarantee that home prices will increase

         While many online articles would laud and even advocate real estate investments, the truth is, no one can really guarantee that home prices will increase. Yes, no doubt that real estate 

is     one of the best investments you will probably ever make in your life, but much like any investment you would make, there is a risk involved. Putting all of your money in one investment is akin to going all-in on a gamble and is indeed, a dangerous game to play with your finances. Try to diversify your investments and do not stick to real estate alone. So that in the event that the real estate market would crash, you still have other investments to keep you afloat.