We have encountered many buyers out there who are hemming and hawing as to whether they should pay all cash for a purchase or take advantage of today’s low interest rates. Even if you have the wherewithal to purchase a property outright, you may still value your liquidity over any purchase discount you may receive and avail yourself of low interest rates, nonetheless.
You may wish to ask yourself the following questions to help you determine the best course for you:
- What percentage of your assets are liquid vs. illiquid?
- Can you get / are you getting a better rate of return on your assets than the interest rate on your mortgage?
- What is your 5-year horizon in terms of making large purchases?
- How stable is your job situation?
- How much of a discount can you achieve from the particular seller with an all-cash offer versus a mortgage-contingent one?
To avoid losing deals to other potential all-cash buyers, waive the mortgage contingency of your offer. This move should make your bid as competitive as all-cash offers in the seller’s eyes, unless time to closing is their top priority. This will also allow you to opt for the finance route first and foremost, and use your cash on an as-needed basis only, should you not qualify for your desired loan.