The Difference Between Selling a House on Cash and Taking Out Mortgage
Living mortgage-free can be enticing especially for those nearing retirement. It is a common practice for empty nesters to sell their large houses for smaller, easier to manage homes. Some people who have lived in a particular house for a long time with no mortgage balances find it advantageous to buy new house with proceeds from cash sale instead of taking another mortgage.
Selling you house in cash can give you the much needed cash injection to finance another house. If the house you selling is big, you will be able to be able to buy a smaller manageable one. In some cases, you would like to use the cash to qualify for a mortgage and invest the money which will pay for the mortgage monthly rates in the future.
Below are the differences between taking out mortgage and dealing with we buy houses Philadelphia companies.
Selling on Cash
Selling a house in cash guarantees you a quick sale. A cash payment company will offer you a price based on the condition of the house. This will save you time on renovations and remodelling. However, you are likely to get a lower offer than the prevailing market prices
Selling a house on cash saves the paper work that comes with conventional ways of selling a house. No contingency is needed when selling on cash. The buyer will close the deal as fast as possible since they want to get a return on their investment either by reselling it a higher value or renting it out.
If you are living a large house and consider moving into a smaller one, you can sale your big house, buy a smaller one and invest the difference.
When considering buying property on cash, you should be ready of time consuming process, fees and interest rates on the mortgage loan. Mortgage underwriters have tightened their standards of issuing mortgages. The long list of documentation is just but one issue you have to deal with.
Once you have secured the mortgage, you have to deal with monthly payments. Mortgages are the largest single bill and the biggest burden most people have to deal with. It could turn out problematic in case income falls due to loss of a job or any other unfortunate instance.
Sometimes back, people used to celebrate paying off their mortgages. However, things have change. People are unlikely to stay in a single place to pay off a 15-year of 30-year mortgage plan. They often refinance their mortgages when interest rates drop and as such extending loan obligations.
Living in a house that is fully paid for gives you peace of mind especially when approaching retirement. It is psychologically beneficial when you retire debt-free.
Beat Competing Buyers
Sellers prefer cash buyers because they are able to close the deal fast as compared to mortgage buyers. A buyer who wants to finance the house with a mortgage has to deal with the lenders timeline, navigating through the tedious process, cash buying requires the seller and buyer agreeing on the terms.
The market is competitive and sellers have numerous interested buyers. The ease and speed at which you avail cash makes you attractive.