Paying for a house www.paydayloansohio.net/cities/heath/ with cash has definite perks. Did you know that paying cash rather than getting a mortgage could help you win a bidding war when buying a new home? You may even be able to negotiate a lower price on the home if you’re paying cash. After all, cash in hand is a sure thing, and a mortgage approval isn’t always guaranteed.
The good news is you can get the best of both worlds with delayed financing, a cash-out refinance option for recent cash buyers.
What Is Delayed Financing?
In a delayed financing transaction, you can take cash out on a property immediately in order to cover the purchase price and closing costs for a property you had previously bought with cash. This allows you to have the advantage of being a cash buyer and gives sellers the chance to know the transaction will close, while giving you the ability to get a mortgage shortly thereafter in order to avoid having all your savings tied up in your house.
You can think of delayed financing as a way to give yourself the negotiating advantage that comes along with paying in cash for the home, while still giving yourself the long-term financial flexibility afforded by making monthly payments on a mortgage instead of making yourself “house poor.”
Why Take On Debt When Your House Is Paid Off?
While paying off debt and keeping it off is always appealing, mortgage debt is often considered a good debt because, over time, it can increase your wealth.
Low Interest Rates
Mortgage interest rates continue to be at or near historic lows. Today’s mortgage rates are hovering just over 3% for a 30-year fixed-rate mortgage. By contrast, 20 years ago, the best rate you could have gotten would have been just below 7%.
In this low-interest environment, doesn’t it make sense to take the bulk of your cash back, get a mortgage to buy your house and find another use for your savings? Continue reading “What Is Delayed Financing And How Can It Help Cash Buyers Stay Liquid?”