Discover when it makes sense to pay with cash vs. getting a mortgage — and when you might consider both.

In a competitive housing market, some buyers offer cash to make their bid stand out from those that require financing. It can be a shrewd move, but did you know there is more to a cash offer than just winning a bid? Take a look at why some people choose a cash option over a home loan and why some get a mortgage even when they’ve paid cash.

Sellers like simplicity

For a seller, an offer of a higher price isn’t worth anything if it turns out the buyer can’t get the financing. Sellers entertaining multiple offers often gravitate toward cash offers because it reduces the risk of the deal falling apart. Additionally, a seller may agree to a lower price for the assurance that comes with cash.

Cash buyers save money

Foregoing a mortgage means you don’t have loan closing costs. Plus, a cash buyer doesn’t pay loan interest which saves even more money long-term. Those who pay cash also have the satisfaction and security of knowing their home is paid in full.

Some buyers do both—pay cash and get a mortgage

Some homebuyers pay cash for a home to beat out other buyers and then obtain a mortgage after the sale is complete. This frees up money for other things such as investing, education or starting a business.

Cash buyers need to reserve some funds

If paying all cash leaves a homebuyer with little to no savings leftover, they could be setting themselves up for financial difficulties. If you plan to pay with cash, make sure you have enough money reserved to cover things like home and car repairs, unexpected medical expenses or the possibility of a lost income.

Learn more about home loans

Consumers home mortgages come in all shapes and sizes and our experienced mortgage loan officers can answer your questions and help you decide if it’s better to pay cash, get a mortgage or do both.

Consumers helps thousands of members finance first and second homes, land home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800-991-2221.