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Advantages of Paying Cash for an Apartment in New York

Maria Fernanda Roda  |  January 17, 2023


Advantages of Paying Cash  for an Apartment in New York
In a fiercely competitive housing market, particularly if you are contemplating buying New York City real estate, buyers often have to find a way to stand out from the others. While buying a home is an arduous process, you can make the transaction less complex by paying cash for an apartment or home instead of relying on a mortgage. We’ve summarized below the reasons why cash is king in the real estate industry when you’re investing in or relocating to NYC. 

1. Accelerates the transaction

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Making an all-cash offer speeds up the purchase because it removes potential obstacles that are otherwise involved in the mortgage approval process. Unlike a mortgage transaction, a cash purchase means there is no need for an appraisal because there is no lender to require it, which saves time.

Using a mortgage to buy an apartment means waiting for the lender’s assessment of its value to be complete before either party can close on the transaction. An all-cash offer keeps lenders and their requirements out of the purchase. Further, if the appraiser values the apartment as worth less than the amount of the mortgage loaned, unless the seller is willing to lower their price or the buyer agrees to increase the down payment, the contract becomes void.

Even as a cash buyer, it’s a good idea to invest in an appraisal to save you from overpaying for an apartment.

2. Sellers favor cash offers

Because sellers are often receptive to a cash deal, it makes sense for buyers who can afford to offer cash to do so. With cash in hand, a buyer and their realtor might even persuade the seller to lower the price or include other amendments in the contract. And if a seller wants to close quickly, cash payment can reduce the process by several weeks.

Cash sales save time because there is no need to wait up to 60 days while the mortgage paperwork finalizes. A cash sale can take as little as one week to complete — once the home inspection is complete and other requirements are satisfied, the closing can occur.

3. Avoids interest payments

When a buyer doesn’t get a mortgage, there’s no interest to pay. Even when interest rates are low, financing a property means paying more in the long run on that loan because many interest payments are made over the life of it.

4. Provides 100% equity in your home

Owning an apartment without a mortgage gives a buyer a higher level of security and comfort. Because they own their home outright, they have 100% equity in the home, which they can borrow against if desired. And a homeowner who fully owns their home is more likely to be approved for another loan than someone with a new mortgage.

5. Less likely to be affected by market fluctuations

A fluctuating housing market can affect some mortgagees by increasing the amount they have to pay monthly. They can potentially end up owing more for their home than it is worth. A cash buyer may be affected by fluctuations in price, but they are in a far stronger position to weather the ups and downs of the housing market.

6. Property insurance isn’t required

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Although it is probably not a good idea to own a home without insurance, cash buyers are not required to purchase homeowners’ insurance (and other types of insurance) in the same way that banks require mortgagees to purchase insurance for the property.

7. Less risk for investment property rentals

If the apartment is an investment rental property, buying it with cash provides several advantages. Because there is no monthly mortgage to pay, the rental property produces a financial source immediately. Sometimes investors who purchase an apartment with a mortgage can lose money if the incoming rent is less than the mortgage and other expenses going out.

Buying your apartment with cash is advantageous. You have the power to negotiate for a lower price, the sale is faster, and there’s no involvement or requirements from lenders. It also means you own the home or apartment outright.

If you’re looking for property in New York City, contact Maria Fernanda Roda for expert advice and guidance on everything from the home search process to the closing.

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Trabajar con Maria Fernanda

Como su agente de bienes raíces, María Fernanda Roda Roca se compromete a hacer que el proceso de compra y venta de viviendas sea lo más sencillo posible. Ella escuchará sus necesidades y criterios para encontrarle su "Casa de ensueño" y se dedicará a mantenerlo informado a lo largo de cada paso.