More People Are Paying Cash to Buy Homes

Posted on March 22 By Francine Huff

More people are using cash to purchase homes. Data from the National Association of Realtors (NAR) show that 26% of home sales in January were all-cash purchases, compared with 18% a year earlier, according to USA Today.

Although some buyers are paying cash for homes to live in, many of these transactions are attributed to investors getting back into the real estate market. The NAR reported that 17% of home purchases in January were made by investors, up from 15% in December and 12% in November.

"Flippers, rehabbers, investors ... are, in fact, buying," Lisa Johnson of Coldwell Banker Residential Brokerage in Haverhill, Mass., told USA Today. "I'm getting builders who have stopped building and are instead buying up condos and single-family homes to fix them up and sell them. It's a neat change I haven't seen in four years."

Completely paying for a home with cash is something that many people can only dream about. But there are some serious benefits to doing an all-cash real estate deal. Among the reasons to pay cash if you can afford it are:

—Not having to go through the process of applying for a mortgage loan

—Avoiding many thousands of dollars in interest payments with a mortgage loan

—Having more negotiating power when dealing with sellers

—Having your pick of some really great properties that have gone into foreclosure or are just priced low

—You can rent out a property without having to deal with mortgage payments

While paying cash for a property is a good move for some people, it may not make sense for others. Do a total assessment of your overall savings, retirement income and other investments to determine if it makes sense to dip into your funds to pay cash for a home. Make a list of your financial goals to see whether an all-cash real estate deal fits into your plan.

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