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Pay Cash or Finance Your Cape Cod Home?

When it comes to buying a home, some of us don’t have a choice about how we’re going to pay for it.  We will, of course, be taking out a mortgage!  But many buyers, especially CAPE buyers who are often retirees or investors, DO have a choice between cash and a mortgage.   So what should you do?

Well, first.  You should consult your financial advisor before assuming that you know the correct answer.  Even if you have the cash readily available, a mortgage might make more sense, given your specific financial goals, circumstances, and intended use of the house.

In most cases, though, paying by cash offers many advantages over taking out a mortgage, assuming you are in the position to do so.  Here are just a few of the more obvious ones:

  • Sellers LOVE cash buyers.  Cash buyers tend to close more quickly because there is no mortgage contingency which can ruin a deal as much as 6 weeks after accepting the offer.  That means the seller’s home has been essentially off the market for all that time, causing the seller to miss out on other buyers.   Even if the buyer is financially qualified for the mortgage, the deal can potentially fall apart if the home does not appraise for at or above the selling price.  Cash buyers don’t pose this risk, although a cash buyer is certainly welcome to insert their own appraisal contingency.

  • Cash buyers can buy ANY property.  Many of the best real estate deals are distressed properties that are in poor yet reparable condition.  These properties are often difficult to finance, yet may represent a great investment opportunity.  A cash buyer can do whatever he or she wants with his or her money.

  • Cash buyers aren’t mandated to carry flood insurance.  Many homes on the Cape are located in flood zones that require flood insurance by lenders – even if the home has never experienced a flooding event.  Cash buyers can make their own decisions regarding flood insurance.  There is nothing forcing them to carry it.

Many Cape buyers who DO require financing but have substantial equity in their primary home choose to refinance or take out a home equity loan on THAT property in order to buy the Cape house with cash, and thus realize all the benefits listed above.  Again, how best to finance your Cape Cod home is a very personal decision that is based on your own specific needs and situation, and should be discussed with your financial advisor for proper guidance regarding your options.

Whether you will be paying by cash or with a mortgage, you want to be sure you are getting the home at a fair price.  Be sure you are working with a good Buyer’s Agent who can educate you about the selling price of similar homes that have recently sold.  This will help you make a decision regarding the fair market value of the property you are pursuing.  Please contact us anytime for assistance.  It would be our privilege to help you procure your dream house on Cape Cod.