Pros and Cons of Buying a Home with Cash

Pros and Cons of Buying A Home with Cash


Can you imagine being a homeowner without a mortgage? What a life that would be! 

The reality is many people are able to buy homes with cash. It’s a lot more common than you think and you don’t have to be a millionaire to do it. If you’re considering buying a home with cash, it’s important you understand the pros and cons associated with doing so. 


Pro #1 – Cash is king in a bidding war. Making a solid offer to pay cash for a home can, and usually does, put an end to most bidding wars. 

Pro #2 – It’s a money saver. Paying cash eliminates many of the expenses buyers face with a traditional mortgage. For example, closing costs are minimal in a cash sale. 

Pro #3 – You’ll not pay 30 years of interest. Without a mortgage, you’ll avoid paying 30 years-worth of interest. 

Pro #4 – Cash Sales are much less complicated. By paying cash for a home, you streamline the buying process. There are fewer things that can go wrong as you won’t be subject to things like credit history or mortgage approval that can delay or stop the sale of a home. 

Pro #5 – Paying cash for a home gives you security and peace of mind. Not having to make a monthly mortgage payment gives you peace of mind and the security of knowing you’ll always have a place to live. 

Pro #6 – Cash gets you around a poor credit rating. If your credit history is less than stellar, paying cash eliminates the worry of being rejected for a mortgage. 


Con #1 – Paying cash for a home may use up all your savings. This is a problem for some as not having money to fall back on in an emergency is a problem. 

Con #2 – Paying cash for a property may limit your investment opportunities. By tying up all your cash in one asset, you severely limit your ability to take advantage of other opportunities in the future. If your goal is to invest in real estate, taking the mortgage route may help you diversify your portfolio better. 

Con #3 – Paying cash for a home makes you ineligible for some tax deductions. The federal government gives tax deductions for mortgage interest, which you won’t qualify for since you don’t have a mortgage or mortgage interest. 

Con #4 – Paying cash can put the seller in an awkward position. Because a cash offer requires less preparation and usually closes much more quickly than a traditional one, the seller may not be prepared to move out so quickly. This may cause a problem, especially if the seller hasn’t found a new home to move to yet. 

Con #5 – Buying a home with cash won’t help your credit score. Because you won’t be making monthly payments, your credit score won’t be affected – negatively or positively – at all. 

If you’re thinking of purchasing a home with cash, be sure you understand the pros and cons of doing so beforehand.