Process of buying a home with cash. 7 steps

Mortgages are good. But sometimes cash is better! What if you already have the required amount to buy a house? The first step is to rejoice. The second is to read this article to understand the process of buying a home with cash. And start acting!

Step one. ‘Proof of funds’ or confirmation of financial solvency.

Real estate sellers will only show their home to a potential buyer once they see proof that they have the money to buy it. When buying real estate for cash in the US, in fact, the funds must be placed in a bank account, after which the bank will provide documents confirming your financial solvency.

Step two. Find a realtor.

A realtor in the USA is guaranteed to be needed! And that’s why:

  • Such experts, agreeing with you, acquire fiduciary duties to you, according to which they are obliged to disclose all known data on the acquired property to you. For example, you liked a house on one of the real estate sites. Still, its description does not say that it is located in an area where residents are not allowed to repaint houses in a different color, according to community rules. Or you decide to buy a plot of land to build a house on it. But the seller did not say that building anything on this site is forbidden since it is under federal supervision. The agent knows what documents must be studied to protect the client and themselves.
  • Only agents have access to professional real estate websites, where there is much more choice.
  • An agent prepares most of the documents when buying a house.

Step three. Formulate your requirements and expectations.

The agent must know precisely what the client wants to offer and the maximum number of options to choose from. This includes the area of the city, the type of house, the number of rooms, the garage, the swimming pool, and other characteristics. Think in advance about how you see your dream home and what is important to you. Next, the agent agrees to view the houses, develops a visit schedule, and coordinates with the client.

Step four. Offer.

If a house choice is made, the bidding period begins. For the house he likes, the agent fills out a document called ‘Offer to purchase,’ which indicates how much the buyer is ready to buy this house for. The owner may reject this offer and may make a counteroffer. Once a price agreement has been reached, the next step is taken.

Step five. Coordination and inspection.

Buying a home with cash is very different from a mortgage at this stage. Bypassing the mortgage, the buyer saves not only money but also time. Regarding time, agreeing on conditions with banks can take about three months (in the case of a mortgage). With cash, no one wastes that time. Saving money is due to the lack of interest on mortgages and insurance for 30 years. Why 30 years? In the US, mortgages are most often given for 30 years. Additionally, it cannot be paid in advance. You must pay a fine if you want to pay off such a large debt quickly.

Therefore, buying real estate in the US for cash is quite profitable.

  • At the same time, lawyers from the side of the seller and the buyer are connected to the process. They agree on the terms of the contract, and together with the realtor, an inspection of the house is organized. This is necessary to avoid unpleasant surprises in the future and for the transparency of the transaction.
  • When applying for a mortgage, a home appraisal is required, during which a certified specialist examines the house and prepares a justification for its value. When buying with cash, this procedure is not required. However, pay attention to it – the results of such an assessment can significantly affect the final cost of the house. For example, you can get a discount for a detected roof leak or the poor condition of engineering systems (hidden).
  • At the same stage, Title companies are also joined. These specialized organizations check real estate’s actual and legal purity: the chain of owners, limitations, prohibitions, arrests, disputes, etc. This will help avoid ‘pitfalls’ and problems with acquired real estate in the future. The title company conducts its investigation and concludes there are no prohibitions or restrictions regarding the acquired property. For example, a forgotten heir and unpaid mortgage debt will not appear. There will not be a prohibition of the former owner that it is impossible to build a gazebo in the yard (yes, there are even such absurd cases!)

Step six. Closing.

At this stage, the final transaction cost calculation is carried out, and documents are signed. The agent and lawyer will inform the buyer of the additional necessary costs. For example, if a house is bought in the middle of the year and the previous owner paid the property tax for the whole year upfront, they must return some of the money. If the former owner has debts for the house, then they must pay everything at the time of the transaction. And only when all obligations are considered paid off, and a contract is concluded.

Step seven. Public record.

State registration of a real estate purchase and sale transaction and the transfer of rights to it. And this is the most crucial stage at which the buyer receives Deed – the official record of ownership. This document protects the new owner’s rights and records all data on the restrictions of this property right. But they are usually not available when buying for cash.

Process of buying a home with cash. Conclusion

To buy a house in the USA for cash, it is enough to put it in the bank, get confirmation of financial solvency, and pick up the object itself. No more documents are needed. Regarding time, such transactions can be completed within a few days and several months, depending on the inspections carried out. If you want to find the perfect deal, sign up for a consultation at LBC Mortgage. Here we practice an individual approach and help to buy dream homes in any financial situation!


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