What’s the difference between a cash offer and a financed offer?
In today’s market, buyers are either submitting cash offers or financed offers to purchase homes. But what’s the difference?
When it comes to getting your offer accepted, sellers and listing agents will look at your ability to complete the transaction, which includes looking at whether you’re offering cash or you’re using financing to buy the home.
Paying with cash is ideal for sellers since you as a buyer won’t have to go through the customary mortgage process. Cash offers tend to make for more solid deals in most cases and usually mean less hassle. When submitting a cash offer, you need to get a proof of funds letter from your bank or investment manager to show your financial strength to the seller.
When obtaining a mortgage, it’s critical that you speak with a reputable mortgage lender in advance so that you can get your financing in order. Your lender will either issue you a pre-qualification letter or a pre-approval letter. Pre-qualification letters are considered preliminary because your lender will have you complete a loan application and make a determination based largely on the information you provided. While it’s good to have a pre-qualification in place, it’s not considered extremely strong in multiple-offer situations.
A pre-approval, however, is one of the most solid letters you can receive from the bank because in order for you to get one, they have to look not only at your loan application and credit reports, but they’re almost always advanced underwritten. This gives the seller much more peace of mind when evaluating your offer on their home.
Ultimately, cash is king in today’s competitive market, but if you’re using financing, a pre-approval provides you with a good leverage point with sellers.
If you would like to be connected with a reputable lender who will provide you a pre-approval letter or you have any questions, please feel free to reach out to me. I’d love to hear from you.