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Chris Arco

Buy With Cash And Then Get A Mortgage

Thursday, September 28, 2017 - Article by: Chris Arco - 1st Nationwide Mortgage - Message

More and more home buyers sidestep the traditional home financing process by using cash to purchase their home -- and then go to a lender later on to apply for a mortgage. with a lot less stress.

In housing markets with high demand, cash-offers are going to be king. However, coming up with the full purchase price of a home for sale in Orange County, CA, or high-cost Southern California counties isn't an easy accomplishment.

That's why some home buyers are making use of a distinctive way to increase their chances in a multiple offer environment: purchasing the home with cash now, then obtaining a mortgage later. It may sound confusing but here is how it works and what comes with it.Revealing the strategy: Buyers liquidate their assets, put together enough cash to purchase the home outright, and then put in an offer as an all-cash buyer. For sellers, all-cash offers are more attractive than ones from buyers who need to finance the purchase. All cash sales translate to less contingencies while a sale with a purchase mortgage will typically have the buyer getting a loan, and there's no assurance that will happen no matter how great your credit scores and income are. Lenders look at your housing history, the amount of credit you have. and your debt to income ratio. That's a lot of variables.

Buyers are still financing their home with a mortgage, but the loan process is delayed until after the sale is final. A 24-48 hour closing is doable with proper planning.

How to buy with cash first and get your mortgage later.Some future homeowners take the money out of their retirement accounts. Others cash-out their investment accounts, sell tangible assets for money, access cash from their regular savings accounts, or get financial help from relatives. Once the house is bought. Then you obtain a mortgage, and pay back anyone you borrowed funds from to get that home.

Important Things to ConsiderBe aware that when removing money from your retirement accounts such as a 401(k) and IRA accounts, penalties may apply for withdrawing funds prior to retirement age.

Assess your financial situation to figure out if buying a home this way is even an option. This strategy is not for everyone. A financial advisor or CFP, may provide more advice in regards to your financial health and investment portfolio.

This strategy can help with keeping your offer competitive in Orange County's hot housing market but don't just liquidate all of your assets to become a cash buyer. It may be wiser to utilize money you already have as a down payment on a home or to acquire a house.

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