Can you buy a house with physical cash

Are you currently planning to buy your dream home, but you don’t really understand the payment process?  Before going on any further, consider one question a lot of prospective homeowners will ask, can you buy a house with physical cash? 

Since this type of payment process is considered the best way to buy a house, you actually will not be stuck with monthly debts, interest bearing instalments, or even credit bonds.

Therefore, being able to buy a house with physical cash is the dream of many people.  With a physical cash payment method, it will certainly save homeowners a lot of money.  The reason is, if you buy a house on credit, automatically there will be a number of additional costs that will burden you for years.  One of them is a mortgage loan or credit interest.

House Buying in Cash Payment Types

Once again, in terms of buying your own house, paying with physical cash should be the most practical way.  In addition, there are two other ways you can pay by cash without even having to bother with any home mortgage financing. 

• Hard or Physical Cash Payment— Buying a house with hard cash has several advantages.  First, payments are usually made without any risk.  Second, the developer will usually provide a significant discount of the house value up to 15%.  Therefore, with hard cash payments buyers will get a cheaper price.

• Gradual Cash Payment— In contrast to hard cash payment, gradual cash or also known as cash installments make house payments in the forms of installments, but have a limited period of time that usually last up to 24 months.  In addition to paying hard cash, paying a house with gradual cash is often preferred, since buyers will not be affected by fluctuations in bank interest rates.  In addition, because the time given is short, the buyer is required to submit a down payment of a large enough amount, in between 30-50% of the house price.

The Advantages of Physical Cash Payment

It’s considered a risk if you buy a semi-finished house and make a payment by cash.  Therefore, first make sure that your dream house is almost 100% complete.  Again, buying a house with physical cash is the best way, but of course you need a big budget for this.  To see why, here are its advantages:

• Every month, you don’t have to think about any credit installments.  In other words, you will not be forced to pay any debts.

• Your actual house price that you buy will be a lot cheaper when compared to paying through a mortgage.  As a result, there will be no other additional expenses, such as administrative fees, insurance fees, and interest fees that you have to pay later on.

• Paying with physical cash means that your home is directly under your authorization.  Otherwise, when you buy a house with a mortgage payment plan, the bank will keep the certificate of the house as a warranty.  Therefore, if you buy a house with physical cash, then the certificate is in your own hands.  In the end, the house also becomes your asset.

• There will be no obligation and interest when paying the house in full amount in advance.  This will certainly make you feel assured and secure because you no longer have to worry about paying the monthly installments along with the interest.

The Disadvantages of Physical Cash Payment

Yet again, with physical cash, you don’t have to bear such a large interest, in contrast to the mortgage payment method.  Thus, the procedure for buying a house with physical cash from a developer or from other parties is also not as complicated as a mortgage payment procedure.  Unfortunately, not all prospective homeowners can afford to buy a house with physical cash, because it takes them a lot of money to do so.  Apart from that, there are also other disadvantages when it comes to buying a house with physical cash:

• It’s a risk, for sure, mainly since the house could possibly not match with what is offered.  For example, the house is in a property dispute, or the house has been used as a warranty for debt, or even the house certificate is faked by an irresponsible party.  That’s why you need to be extra careful with the payment process and with the party involved.  Therefore, it’s best that you make a gradual cash payment agreement.

• Of course, budget wise, you will need extra money from your savings.  Besides wasting thousands and hundreds of dollars in cash, you will have to deal with other expenses, mainly property taxes, property or land rights, etc.

• You will experience a loss in financial leverage due to the real estate market that continues to fluctuate and even depreciate in price over time.  As a result, your house will also lose its value over time.  This is usually a problem if you are considering selling the house in the near future, as it will be valued at a much lower price than what you initially paid.  Therefore, not only will you lose money, your house will also be difficult to sell.  On the other hand, having a mortgage payment might help you at the end, as it can negotiate a settlement of a troubled asset and getting an assistance program with lenders regarding the housing market decline.

Final Thoughts

To conclude, whether you are buying a house with physical cash or not, depends on your own condition.  If you really have enough funds, buy it with physical cash, which is the easiest way.  Make sure the process is done in a safe procedure and also with a safe purchase agreement.  Otherwise, if you don’t have enough funds, and can’t ensure the legality of the house, buying with a mortgage payment method is also a good choice.  With the presence of the bank as a third party, they will check whether the house you are buying is safe or not.

Overall, buying a house with physical cash is very interesting, since it can be a great way to invest your savings in something safe and durable.  Hence, buying a house with physical cash will be safer because the house certificate will be directly owned by you.  That way, you will avoid worrying about the possibility that the certificate will be owned by someone else.

[Image source: Mortgage photo created by freepik]