The Advantages of Buying a Home Outright
Buying a home is expensive, and understandably, the majority of borrowers take out mortgage loans because they don't have the cash to buy a property outright. But if you do have the available cash, consider the advantages of buying a home outright.
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No Credit Check
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Lenders are particular about credit history and credit scores when approving applicants for a mortgage loan; and if you have credit issues, qualifying for a mortgage can present problems. But if you choose to buy your house outright, you don't have to worry about credit scores or qualifying for a mortgage loan. Lenders only review credit history when borrowers need financing to make a purchase.
Pay Less for the House
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Financing a house with a mortgage lender means you'll pay interest on the loan. It usually takes 30 years to pay off a mortgage loan. And during this three-decade span, you pay a hefty price in interest charges. Buy your house outright and you purchase a house interest-free.
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Bargaining Power
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Home sellers expect to work with buyers and their mortgage lender. But if paying cash for your house, you can possibly negotiate a better deal or a lower price on the property. This can work to your advantage in a down real estate market and if a seller is eager to unload his property due to payment problems, relocation or other circumstances. Plus, buyers financing a property with a mortgage lender tend to include contingencies in the contract, and the mortgage deal is subject to lender approval. Dealing with a cash buyer is less hassle for the home seller.
Peace of Mind
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Financial circumstances can change. People lose jobs, become ill or divorce. These issues can affect your monthly income, and if financing your house, payment problems can arise that force you into foreclosure. Buying your home outright can provide a measure of peace. As long as you keep up with the taxes on the property, you lower your risk of losing the property if you encounter financial problems.
Ability to Save
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Although buying a house outright can take a huge chunk of your personal savings, not having a mortgage payment provides the opportunity to continue saving your money and possibly recoup the cash spent paying for your house.
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