PAYING CASH VS. FINANCING

Shorf Hold ‘Em, there are two main ways to buy a home. You can finance it of squatting and winning an all-assets-in game ot with a home loan, or you can pay for the whole thing up front in cash. In Miami, more than half of all home purchases are made in cash, most of them from foreign buyers. In this article, we’ll talk about the home-buying process, from beginning to end, including resources and tips for paying cash.

For many people, the process of buying a home always starts with getting pre-approved by the bank. This is a typical first step for those who need financial assistance, and getting pre-approved for a mortgage will help you narrow your price range and give you the confidence to start shopping for the perfect home. A bank typically looks at your income vs. expenses along with your credit history and approves you for a loan for a specific amount, which you then use toward the purchase of a new home and end up paying back, plus interest, over the next 15-30 years.

Although this is the most popular option for buying a home, it is not the only one. For those who have enough cash to buy the property outright, the procedure for buying a home looks a little different.

There are many benefits to paying all cash for a house, versus obtaining financing from the bank. Presenting an all-cash offer:

  • Eliminates the need to pay additional money on the home in the form of interest.
  • Makes your bid more attractive to sellers.
  • Is usually a “deal-maker” when it comes to bidding wars.
  • Usually closes faster than a financed offer.
  • Allows the buyer to turn around and sell the home faster since it is not leveraged.


WRITE UP A PURCHASE AGREEMENT

If you have a friend who’s a Realtor and you ask really, really nicely, they may draft you a purchase agreement for free. If you don’t, just get in touch with us and our local experts will give you a hand. The purchase agreement puts the details of the sale in writing, such as the price of the home, how much is in escrow, how taxes are handled, who pays what when it comes to closing costs, and other contingencies that are relevant to the sale. When it’s all finalized, send it to the seller for them to review and make any adjustments necessary, sign it, and send a final copy to the seller.

GET FUNDS IN ORDER

Chances are, if you’ve started the home-buying process and plan to pay cash, you probably (hopefully) already have the cash. If your cash is overseas, there are a few things you need to know in order to get big sums of money into the United States for the purpose of buying real estate:

Talk to your bank: Your best option for sending large sums of money overseas for real estate purchases is to work with a foreign exchange banker, but talk to your bank first. Have them give you a quote; some banks have pretty decent rates that are comparable to foreign exchange brokers.

Use a trusted broker: Foreign exchange brokers like USForex Money Transfer, Venstar Exchange and World First offer low exchange fees and few, if any, hidden charges. Do your research when it comes to using a foreign exchange broker, as doing so could save you on average 2-3% in processing fees.

Do it once: In a typical real estate transaction, a buyer may have multiple small sums of money deposited over time, but if you’re paying cash for a house and can do it all in one transaction, you can save big time because by sending more money, you get a better exchange rate.



WAIT FOR THEIR RESPONSE

Hopefully, the seller will quickly and easily accept your offer. They’ll sign it, and you’ll officially be under contract. Sounds scary, but it just means that you’re one step closer to buying the home and everyone is on the same page moving forward.

TITLES AND INSPECTIONS

Typically the seller contacts the title company to assist in the closing process. As the buyer, you should arrange for an inspection to be done on the property so you know exactly what you’re getting into. When you’re going the mortgage route, you’d typically include a contingency in your contract that states that if something went really wrong during the inspection that you could back out at any time. This is still an option when paying cash. If you’re buying a fixer upper that needs a lot of fixing upping, an inspection is a good way to estimate the size of the remodeling investment you’ll have to make later. If however, you’re not planning on having to do a lot of work to the home, an inspection may uncover hidden issues that you’d want to know about before signing on the dotted line. Nobody likes surprises.

SEND A CHECK

But not for the whole amount. You write an escrow check and send it to the title company as a way to say, “I’m in.” If for some reason you back out at this point, the seller keeps the escrow, so don’t back out. This escrow check is different from your down payment (and not all cash offer transactions have a down payment).

CLOSE THE DEAL

At a predetermined day and time, you’ll show up at the title office and write a check for the price of the house minus what you sent in as escrow. (And keep closing costs in mind!) You’ll sign and sign and sign and then take the obligatory photo of you holding the keys with the paperwork in front of you. You just bought a house in cash!

Although not everyone has thousands and thousands of dollars laying around just waiting to be spent on a house, it is possible with hard work, patience, and self- discipline to save up enough money to purchase a house in cash. The list of benefits for all-cash offers goes on and on, and the process is relatively easy and hassle-free. The freedom that paying for a home in cash offers is priceless and it opens up a whole world of possible investment opportunities.

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