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Ways to Buy a Home with Cash

By
Real Estate Agent with Keller Williams Realty

Buying a home in today’s market can be frustrating due to the highest interest rates in recent years and lack of new listings.  Buyers are wondering how they can make an affordable offer to sellers that will be attractive.  One way to make an attractive offer to sellers is an all-cash offer.  This ensures a faster closing date and lower closing costs.   We all know that most buyers do not have the extra cash needed to purchase their new home sitting in their checking account.  Also, some buyers prefer to buy their new home prior to selling their current home due to individual circumstances. Below are some suggestions how you might be able to move forward purchasing a house with cash:

Retirement savings - If you have sufficient funds in your retirement savings such as 401K you can borrow up to $50,000 each.  This will not affect your credit score.  Borrowing from a retirement account           usually requires it to be paid back within 5 years. The repayment will normally be accomplished by reducing your paycheck. Another way is to make a withdrawn from Roth IRA.  The Roth IRA allows you to withdraw your contributions but does not allow withdrawal of earnings from these contributions. The only disadvantage of withdrawing from the Roth IRA is that it reduces potential earnings from contributions.

Securities – If you have a large taxable investment account you can access cash without selling your securities.  This allows you to secure cash quickly with favor interest rates versus a traditional mortgage. This type of loan typically offers up to 70% of your account’s value. Note these types of loans come with some risks.  If your account drops in value significantly you may be required to deposit additional funds or sell your securities to loan-to-value ratio.

Private loans – Another way to buy your home is to get money from family or friends.  This is a viable option if either of the above are willing to lend you money to make a cash offer.  This agreement should be constructed with a written agreement that is beneficial to all parties. Remember the IRS requires a minimum interest rate be charged on private loans.

Home equity loan – This type of loan allows homeowners to leverage the value they have built up properties they owned and use it as collateral to purchase another home.  This option for buyers who have substantial equity in existing properties to gain access to cash without selling their existing investment. A cash offer makes you more attractive to sellers since you can close faster and avoid financing.

Benefits of buying a home with cash – Buying with cash gives you a competitive advantage in the marketplace and financial freedom of mortgage payments. Each person should evaluate their financial situation and develop a lifelong financial plan that includes homeownership for a solid financial future.   

Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

It’s a great post. Thank you for sharing!

 

Have a super fantastic week!

Joe Jackson, Realtor-KWCP

Jan 30, 2024 10:17 AM
Sharon & Bruce Walter
Keller Williams Realty Lafayette, IN - Lafayette, IN
West Lafayette homes for sale

These are options available to buyers but with some of them they need to check with their accountant as some of these could have tax repercussions for them.

Apr 02, 2024 09:20 AM