For Sale by Owner, Foreclosure, Investing, Mortgages, Real Estate Investing, Sell Your House

5 Reasons Why Selling to a Cash Home Buyer Makes Sense

Is there anything better than cash in-hand? When it comes to selling your house, perhaps not. Selling your home to a cash home buyer or considering cash offers for homes can help you walk away from the closing table quite a bit richer than you were when you sat down. But what is a cash offer, and when is it smart to sell a home for cash?

What is a Cash Offer?

Cash offers for homes occur when a buyer offers a seller cash for the entire cost of the house instead of getting financing from a mortgage lender or other institutions.
Most home buyers must obtain some type of financing to afford purchasing the house, usually in the form of a mortgage. However, a cash home buyer will be able to purchase a home without a mortgage loan or other financial assistance. Cash offers are typically lower than the full market value of the house, but there is a good reason for this. First, cash offers are low risk, as sellers don’t have to worry about buyer financing falling through. Second, most of the reduction in the offer price is offset by the fact that the seller does not have to spend time, money, and resources on selling, upgrading, and negotiating the property.

How Common Is It to Sell a Home for Cash?

Cash offers are quite common. The most common scenarios where cash offers occur are from an investor or investment company interested in a property. In these cases, a homeowner can typically sell their house as-is. However, there are many reasons why a cash home buyer may be interested in your property.
Some home buyers have cash on hand, such as from the proceeds of selling their previous home. Cash buyers are also common in competitive seller markets where financing delays may cause the seller to accept a more enticing offer. This occurs because buyer who can pay cash have an advantage on buying a property over mortgage buyers.
Also, the property is a fixer-upper, a cash sale can help the homeowner sell their house as-is. Cash buyers are also commonly courted if the property is facing a foreclosure, since in these cases homeowners typically must close quickly.

Is Working With a Cash Home Buyer a Good Choice for Me?

There are several advantages to accepting cash offers for homes. First, the average mortgage buyer takes 30-45 days to close, whereas a cash offer may take a week or two. Overall, in a competitive market, sellers will benefit from taking a cash home buyer offer over a mortgage buyer. Buyers with the fewest obstacles are the easiest and most profitable to deal with.
For years now, 8 Day Home Sale has been helping homeowners across Washington D.C., Virginia, Maryland, and Baltimore . We’ve helped every single one of our customers sell their home on their timeline, for cash. If this is something that appeals to you, read on for the five top reasons that selling to a cash homebuyer makes sense.

1. More Flexible and Faster Sale Process

Cash offers for homes are more attractive to sellers because there is no fall-through risk with the purchase and there is a faster closing time. A cash house buyer does not need to obtain a mortgage, as it is implied, they already have the cash for the purchase. Therefore, the mortgage application and approval process can be skipped.
Not having to secure a mortgage also means there is less of a chance that the financing falls through. A mortgage buyer can face financial difficulties, like an employment change or identify theft, which can ultimately derail a sale. Also, the underwriting process for a mortgage takes a month or more, and there is always the possibility that the deal will fall through due to the buyer’s inability to secure a loan during that time. Therefore, mortgage buyers are less reliable and certain.
When you sell a home for cash, there is no mortgage application, documentation, underwriting, or appraisal. There is need for the buyer to sort out the title policy and insurance, provide proof of funds, and sign closing documents, but that may only take a week, maybe two. A buyer with a cash offer will have to supply a seller with proof of funds, which automatically shows the buyer is ready and able to close quickly.
When you sell home for cash, you do not need to enlist a real estate agent. Therefore, you do not have to wait for them to take photos, list your home, or host open houses. A faster closing can put money into a seller’s pocket sooner.
And a closing in a cash offer only involves a settlement statement, title, deed, and a cashier’s check. There is reduced paperwork and lower overall closing costs since there are no lender fees or transactions needed.

2. No Improvements or Updates Needed

In a cash sale, you can typically sell the house as is. When your home is offered in an “as-is” condition, the buyer can take it or leave it. You do not need to agree to making repairs or upgrades to the home before a buyer agrees to sell it. As a result, there are usually only a few, if any, contingencies with cash offers for homes.

3. No Real Estate Fees

Cash offers for homes means not having to pay for a real estate agent’s commission. Typically, commission fees are around 6 percent, which can turn out to be a large sum of your selling price. Although a seller may be accepting less money from a cash home buyer than they would a mortgage buyer, a seller will be saving on improvements, bank fees, agent fees, and interest fees.

4. Avoid Most of the Nitty Gritty

During the home selling process, there are several steps that could go wrong. However, with a cash home buyer, a lot of those make or break steps can be avoided. The deal favors the seller, rather than the buyer, because the buyer knows they are getting a home as-is.

A buyer also does not need an appraisal, as would be required by a mortgage buyer’s lender. Home appraisals are needed by the mortgage lender and are considered part of the cost of buying a home. Therefore, a cash home buyer will usually skip this process. As such, a cash offer can help people sell homes quickly and eliminates the cost and time requires to get an appraisal.

Cash home buyers will end up paying some of the same fees. For example, in either case, a buyer needs to pay an earnest money deposit and pay transfer taxes, escrow fees, and closing cost. This is in addition to the homeowner’s responsibility of purchasing homeowner’s insurance, HOA fees (if applicable), and property taxes.

5. Helps to Avoid Foreclosure

If your home is going to be foreclosed due to an unpaid mortgage, selling your home for cash will help you pay your mortgage and start over sooner. 8 Day Home Sale has helped countless home sellers in this situation, as well as people looking to downsize, sell a property they recently inherited, seniors looking to transition to new housing, and people in countless other circumstances that merit a fast and easy home sale. If you’re interested in working with a cash home buyer, contact us today – we’ll work with you on your timeline, and you’ll walk away from the closing with cash in hand.

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Buying a New House, Mortgages

How Much Money to Put Down on a House — Is More Always Better?

As a rule of thumb, many experts will recommend that you put down 20% or more when buying a new home. The reason they cite is that this huge sum paid before the mortgage will show lenders that you are a trustworthy borrower serious about paying off the home yielding a lower interest rate.

Is 20% still the tried-and-true standard or is it possible to buy a home with a smaller down payment? Here are the pros and cons of each option.

The Pros of Putting Down 20%

When you put down 20%, you’re more likely to secure a loan from reputable lenders with a lower interest rate. By putting down 20%, the lender then knows that in the worst-case scenario, they only need to recoup 80% of the home’s value should the borrower fail to pay the loan back. Since you’ve paid more up front, your monthly mortgage payment will be smaller.

Why Less Can Sometimes Be More

Usually, the minimum that you must put down to secure a 30-year mortgage is 3.5%. This is quite a bit less than 20% and will save you some money up front before the mortgage starts. By putting down less initially, you will be able to move into your new home sooner than later without having to spend months or years trying to scrape together the funds for a traditional 20% down payment.

You don’t need to shell out the big bucks to secure a mortgage loan, however, the more you put down up front, the less you’ll have to pay over time. Consider both of the options carefully, and do your research and crunch the numbers before signing any paperwork.

If you’d like to talk about selling your house in Virginia, Maryland, or Washington DC so you can buy another one, head over to our Contact page.

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Mortgages

Hidden Mortgage Costs to Check for in Maryland

Selling your house is easy since we buy houses for cash in Maryland. However, the stress of buying a home is widely considered one of the biggest stresses for anyone. Considering that for most people it is the most expensive thing they will ever buy, this is not surprising. Ensure you’re are aware of all the hidden costs involved.

Home Inspections

The offer is accepted, in your mind you have already moved in and planned which room will be the nursery or which color you will paint the living room walls. But before you can even think about that, you will need to schedule an inspection, depending on how thorough you want to be (and since it is such a big commitment we would recommend that you get as thorough as you can). You could go for a general inspection but can also stretch to a termite inspection, which will give you a good indicator of the condition of the property. The timeline can depend on if you are selling your house fast. These can cost a few hundred dollars and of course with each added inspection, the cost will rise – it could end up helping you dodge a bullet.

Although not compulsory it is advisable to do so, you can request to see any reports that may have caused a previous buyer to pull out but this is only legally binding in some states.

Closing

Once you have had an accepted offer, whoever you arrange your mortgage through should be able to provide you with a breakdown of the costs that are coming your way. These can include lenders fees can range from admin fees to the transfer of funds. Appraisals can cost you a few hundred dollars so don’t be surprised by this. Depending on state there can be a government filing fee, notary fee and any other fees that come with transferring the deeds.

Post Sale

There are still costs to consider that you may not have had previously if this is your first home. Even for those exchanging on their next mortgage these costs will still have to be factored into your budget. Obviously your monthly payment is your biggest cost, but you will also need to pay taxes and insurance. Mortgage insurance is often applicable if your deposit is below 20% so check for this – it can be up to 1% of your loan. The area you live in and value of your property will determine just what you will pay for insurance.

Repairs

Now that you own the property, the upkeep and maintenance is your responsibility – burst pipe, you can no longer call your landlord, boiler breaks – it hits your pocket. It is best to not enter into a mortgage that will choke you of all your funds. Keep a safety net aside and not just for aesthetic work.

So, you have been warned, the cost of buying a house was always going to be more than the price of the property – of course there is also the interest added but this should be something you are expecting. The best thing you can do to protect yourself against an unwanted surprise is ensure you have saved over what you think you need.

Remember, if you need to sell your house, we buy houses for cash in Maryland.

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Mortgages

How to Refinance Your Home

When it’s time to refinance your home, understanding where to start and the exact steps to take can be daunting. If you’re unsure how to refinance your home, it can be tempting to pick the first action plan and end up paying for longer than you need to just to get a lower payment. Going into the process of refinancing fully prepared will keep your confident with what you want and help you make sure that your refinancing fits your goals while staying manageable for your income.

Your goal in refinancing should be to either shorten or maintain the current term of your home loan, while also lowering the rate of your interest. For example, stay you start out with a loan of $200,000 and an fixed rate of 6%, to be paid off over 20 years. The goal of refinancing is to switch out those terms, and come up with something better. For example, the goal of the refinancing would be the same, $200,000 loan, but with a fixed rate of 4% to be paid off over 10 years.

When you get ready to refinance your home, make sure that you know what your credit score is. If your credit score is a little on the low side, you may want to wait to refinance. The better your credit score is, the lower your interest rates will be when you refinance your home.

Before going in, you’ll need to know your home’s current value. Websites like Zillow are perfect for this. For example, you can search the average home value in any county. Take Prince George’s County in Maryland. You can see here the average home value in Prince George’s County. You can do this for any county that you live in. You can see the average rates for other counties, like Anne Arundel County and Baltimore County. This is a good resource, no matter where you live. Once you know your home’s current value, you can start searching for the mortgage rate that will best suite you. You can do this easily online.

Make sure you have all of the necessary documents and paperwork. Even though it can be a time consuming process, you’ll be glad that you put in the effort. Gather up your bank statements, W2s, and check stubs so that you have everything on hand that your lender might need when it comes time to getting your new interest rate.

Remember: refinancing your home can include an array of upfront costs, such as application fees, fees to process documents, and even a charge to run your credit report. Make sure you have the money set aside for the cost of beginning to refinance your home, not just the money you’ll need to start making payments. You’ll also want to make sure you have money set aside for closing costs. Once you’ve decided and settled, you’ll likely need to pay for even more costs at the end of the experience as well.

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Mortgages

7 Smart Tips for Finding the Right Mortgage Company

Your home is probably the largest purchase you will make — and you will do it with debt.

A mortgage is a loan used to buy property. Because it’s for such a large amount, you want to make sure you’re getting the best mortgage rate and working with a lender that offers the best possible terms.

Before you apply for a mortgage, do a little shopping around to see if you can find a mortgage company that fits your needs and can work with your situation. Here’s how to get a mortgage loan with the right lender for you.

1. Understand your credit situation

Your credit is the most important factor lenders will consider, and some lenders won’t work with you unless you have a certain credit score. Before you start the mortgage process, it helps to know where you stand.

You might discover that you need to work with a mortgage company that accepts alternative credit reporting. Perhaps you need to focus on a lender that offers FHA loans because your credit score is too low for a conventional mortgage.

Be realistic about what to expect based on your credit score, and plan accordingly.

2. Don’t forget community banks and credit unions

Too often, we go right to the “big guys.” However, a lot of community banks and credit unions are willing to work with you. These smaller institutions sometimes service their own mortgage portfolios instead of selling them to bigger banks or investors.

As you shop around for the best mortgage, don’t neglect the local players. You might be surprised at what they can do for you, especially if you have taken the time to build good credit.

3. Look online for a mortgage company

The internet offers unlimited possibilities when it comes to information, products, and services. When I bought my house several years ago, I went through a broker at a local community bank. I was wary of using the internet for such a big transaction.

Today, the internet is a secure place to find a mortgage lender. You can visit an aggregator, share your information, and receive several quotes back. It makes it easy to compare your interest rate options and see other terms.

Even though I was reluctant to use the internet when I bought my home, I changed my tune a few years later when it was time to refinance. My refinance was handled almost entirely over the internet after I found the right solution in an online mortgage.

4. Compare mortgage rates and terms from several companies

You shop around for the best price on a TV. Why wouldn’t you shop around for the best rate on something worth 100 times more than your TV?

Get some quotes for an online mortgage, then bring that information to two or three lenders in your hometown. In some cases, local lenders can meet or even beat what you see online. If you’re interested in more personal service and dealing with large numbers in person, this is a good way to try to get the best terms.

5. Look for a lender that understands your situation

As you compare mortgage companies, find out they have the right options for your situation. If you have a low down payment, for example, you have different needs from someone who can put 20 percent down.

Be upfront about your situation and your challenges. Ask potential lenders questions about your financial situation, and what they can do for you. See how knowledgeable they are about programs specifically designed to help your circumstances, whether you are a first-time homebuyer or someone with an unconventional credit situation.

6. Ask a lot of questions and read the fine print

Take a close look at the mortgage company and what they expect. Find out about any fine print, and ask a lot of questions.

Many of us don’t like to look as though we don’t know what we’re doing. However, if you don’t know what you’re doing as a borrower, it could be extremely costly down the road.

Don’t be embarrassed to ask questions. If someone makes you feel stupid because of what you’re asking, they aren’t the right lender for you. Look for someone patient and willing to explain.

Clarify any terms you don’t understand. Also, find out if the lender requires an “earnest money” payment before starting — and if the lender keeps that money even if the loan doesn’t go through. (Hint: If they are vague about what happens to the earnest money, or if they keep it, consider going elsewhere.)

7. Make sure to compare apples to apples

As you shop around for a mortgage lender, be sure you are comparing apples to apples.

Match up interest rates and other terms, and make sure that your quote for interest rates are on the same types of loans. It’s not uncommon for a newbie to look at a 15-year variable rate from one lender and not realize they are comparing it to a 30-year fixed from another lender.

Be clear about matching up the types of loans available. Go in with some idea of what you want, and take notes. Ask for a print-out of the terms that you can take with you and use in your comparison.

Bottom line

The right mortgage company can make a huge difference in your borrowing experience. Whether you get an online mortgage or go the more traditional route, you want a lender that works for you — and offers you the lowest possible rate.

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