Paying a mortgage can be stressful, especially if you and your spouse are still getting your financial bearings. If an opportunity to buy your house in cash comes up, go for it. You'll still have the normal homeowner headaches like repair and upkeep, but owning the deed to your home "free and clear" may help you sleep easy.
Amass Your Cash
You can use cash from various sources to buy a house, including personal savings, cash gifts and inherited money. If you plan to use the proceeds from securities or another real estate sale, liquidate those assets before you enter into a sales contract to buy the house. While you don't need to show seasoned funds in your bank account for cash offers -- as you do with some types of home loan transactions -- you should have all the cash you need on hand when you sit down with your real estate agent to write up an offer.
Draft the Offer
Your real estate agent will help you fill out the same boilerplate forms used for all home sales in your area, regardless of how she is paid. Include an earnest money deposit, also called a good-faith deposit, to boost your offer's credibility. Provide your agent with a copy of your bank statement as proof of funds to retain in her broker's confidential and secure files. Your cash offer removes the financing contingency, and that may be persuasive to the seller, depending on market conditions. Paying cash also may provide you with the leverage to offer a lower price, the benefit for the seller being that the lower offer has almost no chance of falling through due to financing issues.
Sweeten the Deal
The seller gets cash at closing, whether you pay in cash or use a home loan. Therefore, some sellers may not be persuaded by the less-complicated cash offer unless you sweeten the deal. If the house is new or recently constructed, you might consider removing the home inspection contingency from the contract and conducting a home inspection for information purposes only. If the house you are buying in cash is vacant, consider proposing a close-in closing date -- 10 business days or less. This is possible in the absence of the home loan underwriting process, which takes time.
With very good credit and high credit scores, you might be able to acquire a low-interest personal loan, transfer the funds into your bank account and purchase a house in cash. This strategy can be useful if you have investments and cash coming to you in the near future and you can the use that money to pay off the loan. Even when you pay cash for a home, expect to pay a few closing costs, including prorated property taxes, utilities and homeowner association fees. You also should purchase owner's title insurance to protect you against any hidden title defects, such as liens against the builder or previous owners.
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