Buying A Home Home Loans

Pros and Cons of Buying a Home With Cash

buying a home with cash
Written by Rebecca Lake

In the face of tighter lending restrictions and rising interest rates, more home buyers are skipping out on a mortgage altogether in favor of paying cash for their dream property. Through the second quarter of 2014, nearly 40% of home sales were completed with cash according to RealtyTrac. While there are some definite advantages associated with going this route, there are a few potential drawbacks to keep in mind. If you’re undecided about whether you should buy a home with cash instead of opting for a mortgage, here’s a brief rundown of the pros and cons:


1. No bank hoops to jump through

Aside from finding the right house and getting the seller to agree on a fair price, the most bothersome part of buying a home is dealing with the bank. Applying for a loan typically means filling out a mountain of paperwork and despite your best efforts to get all of your documents together, there’s inevitably going to be something that you’ve overlooked.

Assuming you’re approved for a mortgage, you still have to deal with the closing process which means signing off on even more forms. Depending on how closely your application is scrutinized and how on top of it your loan officer is, it may take two months or more before the keys to your new house are actually in your hand. Paying cash allows you to sidestep these hassles altogether.

2. Your credit’s not a factor

Although lenders are expected to relax restrictions for borrowers somewhat in 2015, your credit still plays a big part in determining whether you’re able to qualify for a mortgage. If you’ve had trouble in the past with delinquencies or even a bankruptcy, you’re going to face some much bigger obstacles to approval and the odds of locking in the best interest rate are slim.

The nice thing about being able to pay cash for a home is that the seller’s not going to care what your credit history looks like. Those past mistakes that could make you seem less credit-worthy in the bank’s eyes don’t come in to play when you’re bringing a nice pile of money to the table.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website,

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