Your financial strength is the money you have or can get within a reasonable timeline, for example, as a loan. Your properties, job, income, and debts determine your financial strength. You can leverage a strong financial profile to improve your home buying experience and outcome. Below are a few ways to do this.
Go For a Cash Purchase
Many automatically opt for mortgage purchases because they cannot afford cash payments. If you have a strong financial profile, compare cash vs. mortgage purchases and go the cash route if it makes sense. For example, a cash purchase makes sense if you have significant savings and won't have to liquidate valuable assets for the purchase.
A cash purchase means:
- You avoid interests you would have paid on the mortgage
- You reduce some closing costs
- You have a strong purchase offer since many sellers love cash purchases
- You can close the deal fast since you avoid the mortgage process
Evaluate your circumstances to make an informed decision.
Make a Huge Down Payment
Most down payments range from 3% to 20% of the purchase price. Strong finances mean you can increase your down payment and enjoy the associated benefits. For example, a huge down payment reduces your interest rate and strengthens your application. In short, you get some of the benefits of a cash purchase.
Get a Sizable Mortgage
A strong financial situation does not necessarily mean you can or should consider a cash purchase. Depending on your assets and goals, you can still benefit by taking a mortgage for the purchase. Strong finances mean you can easily get a huge mortgage and buy the house of your dreams. Preapprove your big mortgage and enjoy a quick home purchase process.
Negotiate Good Mortgage Rates
Lastly, you can use your financial strength to negotiate your mortgage rates and terms. Mortgage companies determine mortgage rates using:
- Your credit score
- Your asset-to-income ratio
- The down payment
- Your income
- Mortgage term
Strong finances mean most of the factors above favor your mortgage application. For example, you can use your high credit rating and income to negotiate good interest rates. You can even take a short-term mortgage if you can handle the repayments.
Hopefully, you will buy the best home for someone with your finances. Involve a real estate lawyer in your home purchase process as early as possible. The lawyer will use their expertise and experience to help you buy your dream home. For more information on homes for sale, contact a professional near you.