What if you didn’t have a mortgage payment on your next house? It may sound a little unrealistic. But for a number of homeowners, it’s actually doable.
Nearly 3 in 10 homes purchased today are bought in cash, according to the National Association of Realtors. That’s far more than the pre-pandemic norm.
So, how are so many buyers pulling that off? The answer is simple: home equity.
Back in 2020-2021, mortgage rates and the number of homes for sale were both at all time lows. And that combination pushed home prices up, fast.
If you owned a home during that time, it likely gained significant value – maybe even enough to buy your next house in cash. NAR explains:
“…rising home equity has armed many existing homeowners with the financial leverage to make cash offers, allowing many existing to convert years of price appreciaiton into immediate purchasing power.”
Here’s why you may want to go that route yourself, if you have enough equity to do it.
- 1. Your Offer Becomes More Attractive. Sellers value certainty. And an all cash offer removes one of the biggest unknowns in a transaction: financing.
- 2. You Can Close Faster. And since you don’t have to worry about underwriting, lender approvals, and loan processing, the time it takes to close shrinks. If the owner of the house you are buying is already under contract on their next home or they just need to move fast, that speed is a real draw.
- 3. You Won’t Have Monthly Mortgage Payments. When you buy in cash, you don’t have to finance your purchase. That means you don’t have to worry about what today’s mortgage rates are and you own the house outright from the day you close. That’s a big deal.
No Mortgage! No monthly payment! Full ownership!
- 4. You May Get a Better Deal. And here’s one more thing that surprises a lot of homeowners:
According to Cotality: all cash buyers tend to spend roughly 9% less on the house than buyers who use a mortgage. That’s because some sellers are willing to accept lower offers to get a deal done quickly, with more certainty of closing, and fewer financing hoops to jump through. That advantage grows with each passing year.
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Is an All Cash Move Realistic for You? Not every homeowner will buy their next house outright in cash. And that’s okay. But the bigger takeaway is this: the equity you’ve build may give you more options than you think.
Whether that means downsizing and eliminating a mortgage entirely, or just relocating with stronger negotiating power, your current house may be what makes it possible.
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