The traditional cliché goes something like this: “Cash is king,” but is that true when purchasing a home? Yes, it sure is.. However, in other instances, it doesn’t work out that way. In most markets, buyers may benefit from several advantages when purchasing a home with cash. It gives you sway over sellers who are eager to move their inventory and in markets with limited inventories and fierce competition (which is the case in most markets today). You should be aware of the drawbacks of paying in cash. By reading on, learn all you need to know about buying a house in Raymore, Missouri, with no money down.
Benefits of Buying a House with Cash
Paying cash for a Raymore house has several benefits that can’t be disputed.
A BUYER WITH BETTER CONDITIONS
“A seller who understands that you don’t plan to apply for a mortgage is more likely to take you more seriously. ” This can be a time-consuming process that could lead to an applicant being rejected, the deal falling through, and starting all over again,” says a real estate agent.
BETTER DEAL POSSIBLE WITH CASH OFFER
You have more negotiating power and a stronger position when buying a house with cash. Sellers will not have to wait for you to finance because they already know the money is there.
MORTGAGE TROUBLE-FREE
Since the housing bubble collapse, lenders have tightened their rules and criteria significantly. Paying in cash eliminates the need to go through the lengthy process and jump through all of the hoops required by credit cards.
MORTGAGE PAYMENTS DO NOT NEED TO BE A CONCERN
If you lose your job or suffer a financial setback, your mortgage payment will likely be the largest single expense you face each month. Buying a house with cash, on the other hand, ensures that you’ll never have to worry about how you’re going to pay your mortgage.
RENT-FREE RETIRED LIFE
You’ll have peace of mind in your retirement years because there will be no mortgage payment to make when your income is fixed and probably reduced,” he says.
Buying a house with cash upfront can be a wise decision. This is especially true as you get closer to your golden years. Even though more Americans of retirement age are saddled with mortgage debt than they were 20 years ago, many financial advisors and retirees see at least a psychological advantage in retiring debt-free.”
The Drawbacks of Buying a House with Cash
Paying cash for a house in Raymore has some drawbacks, albeit none are as severe as those listed above. The most significant of these are…
“You’ll have a lot of money invested in one asset class.” One of the golden laws of personal finance is to diversify your assets, and if buying a home requires most of your money, you’ll be breaking this guideline. For example, if you don’t have the money to invest in stocks, you won’t be able to do so.
REDUCTION IN INVESTMENT RESULTS
Assuming that the asset appreciates over time, a borrower’s return on investment is typically larger when he or she purchases an asset with borrowed money. However, if you pay in cash, the return on your investment can be significantly lower.
This is how financial gurus put it. A 33 per cent return on your $300,000 investment, if you purchased the house with cash, would be possible. The return would have been 166 per cent (a gain of $100,000 on your $60,000 down payment) if you had only put down 20 per cent and borrowed the remaining 80 per cent. Mortgage interest, tax deductions, and other considerations are omitted from this simplified example, but the underlying idea remains the same.” You paid $30,000 for a house that has since appreciated by $100,000 and is now worth $40,000,” says a real estate agent.
Liquidity is Lost
Buying a house with cash means that most of the buyer’s money is invested in the property. As a result, those funds are unavailable, at least on short notice.
INABILITY TO SAVE YOURSELF FROM CLAIMANTS
In Raymore, paying cash for a home means that you’ll have less protection from creditors if something goes wrong.
“Having a mortgage can shield you from some creditors in some cases. Consumers’ houses are generally protected against creditors in the majority of states. Florida, for example, totally exempts the home from the reach of certain creditors. Depending on the jurisdiction, other states have restrictions ranging from $5,000 to $550,000. In other words, creditors can’t force the sale of a house, no matter how valuable it is.
Choosing the Right Path
There are both pros and cons to paying cash for a home. If you’re looking for the most value for your money, it’s important to figure out which choice would provide you with a higher return on your investment.
To make an informed selection, it’s best to speak with a Raymore real estate agent. They can provide you with information about the Raymore market. Contact us immediately at (816) 695-7352 if you are interested in purchasing a home in Raymore, Missouri, with a down payment in cash.