There are many advantages to a cash closing when buying property. It can give you a considerable amount of leverage when negotiating the cost of the property. Often when you are looking for a cash closing you can offer a lower price. A cash closing also gives the seller a sense of security knowing that there is a lower possibility of the sale falling through. In a competitive market a cash closing will often give you the upper hand against other people who are looking at buying the same property. The main reason why sellers often prefer a cash closing is because the closing process generally takes much less time with a cash closing. However, you will need to prove that you actually have the cash to complete the transaction. You will often be able to prove your funds through your bank by sending the seller a letter proving your ability to complete the transaction.
In such a competitive housing market that we are in today, a cash closing may allow you to get a house that you may not have otherwise been able to. One of the disadvantages in a cash closing is that generally the buyer’s lender often becomes very involved in the closing process. This leads to a third party being involved where there would not be one in a closing involving a mortgage. This often causes a few more steps and can make the closing process overall slightly more complicated.
With a closing involving a mortgage, the buyer takes out a loan to purchase the property. The buyer takes out the loan from a lender that is to be paid back over an agreed upon time. This loan is to be paid back including principal and interest, the property is the collateral for the loan to ensure that the money is paid back. The buyer must apply to receive the mortgage, which means that they must meet a number of criteria. These requirements include a minimum credit score and a down payment that varies depending on the price of the property being bought. The process of obtaining a mortgage is one of the main reasons why a closing involving a mortgage generally takes longer. There are a few different types of mortgages that are available to a homebuyer. There is an adjustable rate mortgage, where a buyer and lender can adjust the terms of the mortgage. Adjustable rate mortgages are often used when the buyer does not plan to live in the home for a long time. Another type of mortgage is a fixed rate mortgage, this type of mortgage is not as flexible as an adjustable rate mortgage and is often used by buyers who want a set monthly payment.
In conclusion, there are many differences between a cash closing and a closing involving a mortgage. The main difference is the length of time that it takes for each transaction to be completed. It is important to reach out to an experienced real estate attorney instead of a personal injury lawyer in Alabama to discuss which type of closing is best for you.