Buying a house with cash can be a smart move for many homebuyers. It has a

number of benefits, including the ability to avoid a monthly mortgage bill, as well as the peace of mind that comes with owning a house outright. However, there are a few things you should know before making this purchase decision.

Pros of Paying Cash

For starters, you’ll avoid the risk of missing payments or defaulting on your loan. And if you have good credit and a solid financial track record, paying cash for a home can also be a great way to build wealth.

It can make you a more attractive buyer in a competitive real estate market, too. Sellers are more likely to give a cash discount if they think you’re less likely to fall out of the transaction. This is especially true if you’re competing against a mortgaged buyer.

When making an offer, a cash buyer should provide proof of funds – similar to a preapproval letter – from their bank within days of signing the agreement. That way, sellers will know you’re serious about buying the property. Read more


Even if you do end up using a mortgage, your lender is likely to consider your cash purchase an attractive option and will offer a lower interest rate, which can help you save on costs in the long run. Plus, you’ll be free to use that extra money to invest in other areas of your life if you’d rather.

Typically, closing costs are about 2% lower when you buy with cash. This is mostly because you won’t have to pay mortgage recording tax, which is 1.925% of the mortgage amount, and bank and other financing-related fees.

Another benefit of paying cash is that your closing costs will be much faster, as you won’t have to wait for your loan to process. Depending on the property, it may take as little as a week to close on a cash deal.

A cash purchase will also likely come with fewer surprises, says Nick Holeman, head of financial planning at online investment adviser Betterment. Often, people who buy with cash find they can outperform a mortgage by investing the money in a diversified portfolio, Holeman says.

If you do decide to buy a house with cash, be sure to have an emergency fund to cover unexpected expenses, such as car repairs or medical bills. This will help you avoid relying on loans from your bank, which could lead to a higher interest rate or other penalties down the line.


You’ll need to do an inspection and title check to ensure the property is free of any problems that could cause you to remorse or back out of the deal. You’ll also want to pay for a home insurance policy that covers the home’s structure and contents.

While there are many advantages to buying a home with cash, it’s not always the best choice for everyone. If you’re on a tight budget or have a bad credit score, getting a mortgage might be the better choice.