Here’s how so many people are buying homes with cash lately.
How are all these people buying homes with cash? Where is all the money coming from to buy homes with cash or make massive down payments? I get asked these questions quite a bit, so I’m answering them for everyone here today.
Here’s just one example: Let’s say someone bought a home in the down market of 2014 and paid about $400,000. Fast forward to today, and they can sell that same home for around $750,000 due to home appreciation. They now have an extra $350,000 of equity plus whatever their original down payment was that they can put toward a new home. Just the $350,000 is 20% of $1.75 million, so they can put a 20% down payment on a house that costs that much.
These types of situations are giving buyers substantially more purchasing power to buy their next homes, which is part of why we’re seeing so much appreciation. Of course, you have to be able to afford that higher mortgage payment, so a lender will look at your debt-to-income ratio. So maybe the buyers in the example above won’t buy an almost $2 million home, but a $1 million home would certainly be within reach. With the way interest rates are these days compared to where they were, you may even have the same monthly payment on a larger home as you did on a smaller one.
An alternative is the programs out there that can turn you into a cash buyer. Even though you’re getting a loan, by paying a small fee you can be a cash buyer, which allows you to compete and possibly outbid conventional buyers with a cash offer, which will be converted into a conventional loan later. That’s another way so many people are buying homes with cash in this market.
If you need a great lender, I’d be glad to make an introduction; they’ll help guide you through the process. If you have any questions or are looking to buy or sell, please hit me up via phone, text, or email, and let’s have a conversation. I look forward to speaking with you soon.