If you’re lucky enough to be able to pay for your new home in cash, you may still be considering taking out a mortgage so that you don’t use up your entire savings account in one purchase. Before you choose a new stack of debt over a $0 balance, consider these advantages to paying for your home in full.
1. You’ll get more favorable conditions from the seller because they’re happy to have a no frills, smooth sale. That means that you’ll have a lot of wiggle room when it comes to negotiations over price, closing time and repairs.
2. In the end, the price of the home will likely be lowered.
3. The transaction will require much less paperwork than usual, which also means that the purchase won’t be delayed because of a mortgage approval.
4. You won’t just save money on the home itself, but also on closing costs, mortgage application fees, bank appraisals and title insurance, to start with.
5. You won’t face the all-too-common stress of being denied for a loan.
6. Since you won’t have a mortgage, you also won’t be paying interest on the loan. That means that you’ll spend much less over time.
7. Since you don’t have a mortgage to repay, you never have to worry about losing your house to the bank.
8. You’ll immediately have full equity in your home.
9. You won’t be at the mercy of a low appraisal. When a lender appraises your home for its value, they often compare the house to other neighborhood homes that have sold at lower-than-normal prices. If your appraisal is low, the loan will be too, even if you’ve already settled on a price with the seller. Often, buyers aren’t able to purchase a home because the loan is too small.