How do I go about purchasing a home without a mortgage, possibly making a cash offer or short payment plan?

Question

I am a first time homebuyer. First off, after going through frustration and headaches with the way the banks have made it nearly impossible to obtain a mortgage I decided not to bother with this anymore. Instead, I considered homes that were very affordable, and surprisingly in excellent condition,in nice areas with low taxes. Being so many banks recently closed, and two large mortgage lenders are now in big trouble financially, I am grateful I did not get a mortgage. They did me a favor! However, now that I would like to purchase one of these homes that are well affordable without going through the red tape to obtain a loan (and it wouldn't be worth it because of the very reasonable price) I just need to find out how to go about doing it this way? What I already know is I could make an offer in cash, and negotiate the price accordingly and so forth, but then in addition to cash or possibly a short payment plan, what are other options of purchasing a home without a mortgage?

Answer 1

You could certainly pay with cash, just understand you will need to prove where those funds came from.  And yes you could negotiate the price. Seller financing is another form of mortgage.

Answer 2

I only see one option. if the seller likes the offer you are presenting and believes you have the capital and are trustworthy, also check to see if seller financing is an option then I believe it shouldn't be a problem. write up a contract. I'm no expert but I say please do your research or better yet if you have the money talk to a real estate attorney. there are ton of documents and legal ramifications associated with the transfer of real estate. i wish it was that easy, you hand over the money and they give you the key to the house but real estate has its own process for ownership.  those closing costs can add up (title insurance, taxes, recording fees by the govt, apprasials, inspections, etc....) again I say do your research as far as what forms/ paperwork is required, talk to an agent/ attorney (you dont have too but most are experienced in this area and can make the process more smooth, and finally if the seller is willing to sale to you and agree to a cash offer/ payment plan write up a contract (witnessed and notarized). even if you are not the one drawing up the paperwork, you need to protect yourself. the seller too could make mistakes on the paperwork. I STRONGLY RECOMMEND you talk to or/and hire an agent or/and real estate attorney if you are not comfortable doing the paperwork. it might cost you to hire one but you'll thank them later. make sure that contract is bullet proof!!! No holes in it,  the smallest snafu in paperwork can cause huge headaches down the road. Ive seen it happen. it can be a variety of things (lawsuits, taxes, true ownwership, problems with home, etc.....)

Answer 3

My house has no loan.  It is free and clear of any loans.  You could approach an owner of a house that is free and clear.  You say that you don't want to get a mortgage.  You will buy her house and make monthly mortgage payments directly to her.  It's called "seller financing".  The bad part for her is that she is not getting her entire price in cash ($100,000).  She has to wait to get her money.   The good part for her is the mortgage interest you will be paying.  If she had put the $100,000 in a bank savings account she would get 1% interest.  You would be paying her 6%.  That's a lot better.

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Answer 4

A mortgage is not mandatory when buying a house.

If you have enough cash to buy a house, you can just put in an offer like normal.  When it comes time to close, you have to transfer the funds to the seller.  In Canada, the $$ gets places In Trust with a lawyer.  The lawyer transfers the money once the transaction is complete.  There are some differences in the process in the US, but I believe the general idea is the same.  

Keep in mind that you will be tying up much of your cash in this process.  For example, I can afford to pay cash for a house, but then I would have no cash left in the bank.  It makes more sense for me to get a mortgage and pay interest than it does to have all of my available funds tied up in one transaction. Make sure you have extra cash to cover closing costs, and to use in case of emergency.