Buying a home “with cash” can benefit both the buyer and seller with a faster closing process than with a home loan. Paying cash also means no interest and can mean lower closing costs. Yes, buying a home is much easier with cash. You don't have to wait for an inspection, evaluation, or subscription.
Even though an inspection isn't required when you buy a home with cash, it's a good idea to get one to make sure your new home doesn't come with costly surprise repairs. Home sellers also often favor cash buyers so they don't have to deal with loan terms, which means their cash offer is more likely to be accepted. While there are several benefits to buying a home with cash, there are a few instances where you may want to seek financing. In the event that the housing market falls or the value of your home declines, you won't end up with a mortgage that has a higher value than your home.
A cash buyer's home is not leveraged, allowing the homeowner to sell the home more easily even at a loss, regardless of market conditions. Some people have the ability to pay for a home in cash, but they still prefer to apply for a mortgage on the property. If you invest a lot of cash in buying a home, you may not have money to cover basic expenses (such as furnishing it) or other living expenses (such as medical bills, car repairs, and vacations). You can pay for a house with cash, but that doesn't mean that the advantages of paying for a house with cash outweigh the disadvantages.
You can make a cash offer on a home when you want to get noticed above buyers who only have a mortgage pre-approval. Paying for a home in cash means that the buyer will transfer the money or issue a cashier's check on the closing date instead of resorting to a mortgage company. You could save less than the money you could have earned if you had taken out a mortgage and invested the money you didn't spend on your home. The IRS doesn't care that someone bought a home with cash, except in the rare case where someone owes back taxes and the IRS wants to impose a lien on that person's assets.
In addition to saving on the lifetime cost of a mortgage, paying cash for a home can save money in other ways. You can still be approved for a mortgage through a Federal Housing Administration Loan with a starting 10% if your credit score is at least 500. We'll go into the details below, but for now, just know that paying cash avoids mortgage registration tax when you buy a home or condo. In a hypercompetitive housing market, prospective buyers are doing their best to close new home offers, and for some, the winning tactic is a cash offer.